The importance of KYC compliance for crypto account holders.

Photo credit: Blake Wisz
Introduction
The concept of decentralization is not quite friendly with KYC and Anti-money laundering (AML) conventions and the protagonists of decentralization do not hesitate to express this view. The debate about KYC and AML has come a long way but on the other hand, the sane opinionists argue that it is better to have ‘a lawful and secured society with KYC’ than ‘a lawless and apprehensive society without KYC’.

The proponents of ‘a lawful and secured society with KYC’ are aware of the excesses of the conventional or traditional institutions such as victimization, suppressed personal freedom, prolong transaction span, heavy transaction fees and a hoard of other barbaric financial policies that are inconsiderate of the masses in all social stratas. None the less, they also know how important it is to sustain the overall goal of decentralization by keeping the bad-guys in check via KYC regulation.

Though exchanges are there to secure users’ details but the incessant cases of some exchanges getting hacked with their clients’ sensitive details ending up in the wrong hands, have enhanced endemic fears amongst the uncompromised users who do not want to take the slightest risk in protecting their personal details.

Binance is amongst the few exchanges in the world with robust security when it comes to KYC and as one of the largest exchanges in terms of market capitalization, she has the civil responsibility to protect itself and individual accounts of the millions of its users by being KYC-compliant. For these reasons, I will be using Binance as a reference subsequently.

What is KYC?
KYC is an ellipsis for Know your customer and it involves collecting primary but minimal information relevant to a potential client’s identity by a financial or non-financial centralized authority. The information required to collect would usually include a national identity card or International passport, social security number, phone number and residential address details.

These verification details are often required when the user is signing up an account or when he has updated his relevant details. For opened non-verified Binance accounts, customers can only execute simple tasks like restricted deposits and withdrawals of fiat and crypto currencies.

The objective of Binance like any other KYC procedure undertaken by major exchanges around the globe is targeted at a tenable crypto-community.

Why are Customers subjected to KYC?
Courtesy: Clay Banks
KYC transformed from being a patriotic act into a full-fledged law in the USA after the September 11 terrorist attacks on the USA. Financial institutions were then required by the law to produce details of suspicious transactions which would be verified to eliminate the possibility of terrorist activity funding.

Account users could also utilize their accounts for money-laundering activities, sells of weapons, transaction of illicit drugs, ransom for kidnapping and cyber fraud activities. With KYC in place, culprits can be apprehended using the information they had provided during the KYC process.

Although KYC is part of Anti-money laundering (AML) policy but the former is not the same thing as the latter. Binance, just like any major exchange in the world, is not trading the customer’s decentralization right to anonymity. KYC is being done as a way to protecting the society from the wolves amongst humanity. Any account user with pure intention would understand the altruistic reasons why KYC is necessary for mass adaption of the Blockchain technology.

Performing KYC on Binance
Getting your identity verified on Binance is a smooth and simple procedure. It is a task which could be completed in less than an hour.First, the potential user of Binance account should sign up for an account. The next thing to do is to confirm his email via the link sent by Binance in his email inbox. After the user has confirmed his email, he should login into his Binance account and locate the profile avatar and click on it.

This action will prompt condescending options including ‘Identification’. By clicking on ‘Identification’ the user is taken to a personal verification page with three level classifications: Beginner, intermediate and advance. The user is expected to click on a yellow button with inscription ‘Verify Now’ to begin the basic verification level.

The Basic verification doesn’t last more than a day and only personal information is collected by Binance. When I did mine, approval was almost immediately within the first hour.The Intermediate level verification is usually concluded in not more than 10 days and requires an additional upload of a Government ID which shows your nationality, inputting your date of birth and taking facial recognition assessment.

The advance level of the Binance personal verification is only possible after the user has passed the basic and the intermediate verifications and the extra requirement is a proof of address. This level verification is reviewed within 10-day limit by Binance and unlocks premium privileges.

After completing the basic level verification by submitting the correct minimal requirement, the user has the option to commence trading using his basic verification or better still to continue with the intermediate and advance levels before starting trading activities.

However, Binance has made the intermediate verification not only mandatory but has incentivized the process by rewarding verified users a trial voucher worth 500 BUSD with in the first three days of being verified. This non-withdraw able voucher must be redeemed within the stipulated validity period and used for a 7-day BUSD flexible saving. The user is entitled to use the accrued interest from the trial saving.

Binance account users are also categorized into VIP0,VIP1,VIP2,VIP3,VIP4,VIP5,VIP6,VIP7,VIP8 and VIP9; each category is automatically activated by the required minimum volume of the user’s trading activities in 30 days and it is quantified in BTC and BNB irrespective of the trading pairs used. VIP 0 is reflected in monthly trading volume less than 50BTC or a 0 BNB balance while VIP9, a monthly trading volume equal to or greater than 150,000BTC or 11000BNB or less.

KYC PROCESSES
Courtesy: Arlington Research
When a user completes a KYC by Binance or any other major exchange, there are three seamless stages he undergoes: the actual verification process which is known by some exchange as client identification process, durable risk assessment stage also known as client outstanding diligence and continuous monitoring.

The customer identification process harnesses the details of the customer to establish his real identity. The client outstanding diligence stage institutes further assessment on the credibility of the user, watching him for suspicious activities like fraud etc. The last stage of the KYC has to do with endless evaluation or monitoring of your account activities that are contrary to financial regulatory laws and provisions.

The whole KYC processes should not be seen as intimidating but steps to protect users from preventable risks. In few years ahead, KYC in decentralized platforms would be given a new definition and likened to community policing or reorganized escrow.

Deposit and Withdrawal features of Binance Verification Levels
Binance has allowed the greatest level of freedom in her advanced-verified accounts and I know similar trends would be adopted by other main exchanges which are KYC-compliant.
The basic verification level enables the account user to deposit unlimited amount of crypto and withdrawals of maximum crypto equivalent of 0.06BTC daily and a limited $300 fiat deposit and withdraw.

For the intermediate level, the user can access a daily $50,000 and monthly $500,000 withdrawals for fiat currencies with unlimited crypto deposits and a limitless peer to peer transaction.The advanced verification gives the user more premiums with a daily $200,000 and a monthly $2,000,000 worth of fiat and crypto currencies for withdrawals and unlimited deposits for crypto.

Benefits of getting verified on Binance
The advantages of having a personal verification done on Binance and any other major exchange are numerous. First, verification technically confirms that the account user is a human being and not a Bot.

Secondly, your geographical location where you reside is equally authenticated.
The third merit is that you are certified as a responsible user who is accountable to his account, its security, its transactions and you will inform Binance when there is breach in use of your account.

The fourth benefit is the reduction in the illegal uses of the users’ accounts such as fraud.
The fifth gain of doing a KYC is the uninterrupted access to Binance services such as withdrawal of up to 100BTC daily for verified accounts as against 0.006BTC for non-kyced accounts; the same thing applies to deposits, higher amounts for higher levels of verification.

Lower and lowest transaction fees with intermediate and advanced verifications respectively are the sixth plus for getting verified.Convenient use of credit and debit cards usually MasterCard and Visa to purchase crypto is possible with some level of verification and forms the seventh advantage of kycing.

The eighth benefit is that, for the customer to use Binance Launchpad, he needs to be verified.To use the Binance Non-Fungible Token (NFT) market place, Binance application programming interface (API), BNB vault, Binance pool, Binance savings, Binance staking, Binance crypto loans, Binance dual investment and Binance vote; one has to be an intermediate verified account user and this add as the ninth use-case.

The tenth advantage, peer-to-peer transactions are enabled from the intermediate level of verification and this has improved decentralized trading of crypto currencies.
To use third-party accounts on Binance like WazirX, JEX, Tokocrypto and BinanceTR, intermediate verification of user account is indispensable and this is the eleventh advantage of Binance KYC.The twelfth benefit is the reward of $500 BUSD Voucher for a 7-day trial flexible savings, interest which the user can withdraw.

Conclusion
KYC is a function which empowers Binance or any other exchange to safeguard her account users against certain risks even though the user’s anonymity is compromised to a lesser extent. This way, a safe and crime-free trading milieu is heightened for all users.

If you need to trade with dignity, premiums and security get your Binance account and also get verified.New, intermediate and advanced readers and traders can take advantage of Binance affiliate program and earn up to 40% commission on trades made by other traders that you have referred to Binance.

If you are a content creator, you can benefit from the Binance affiliate content program and get paid for submitting an original content on a monthly basis.To benefit from all Binance privileges, including the affiliate program, readers can access Binance here:
https://accounts.binance.com/en/register?ref=11515767

Disclaimer
Trading of digital assets has some risks. Consult your financial advisers before engaging in substantial digital assets trading. The information contained in this piece should not be regarded as a financial advice.

Note: This piece was featured by me on medium in September 2021 and can be accessed via this link. https://medium.com/@mikhailikpoma/the-importance-of-kyc-compliance-for-crypto-account-holders-b3076b228414