If you are a newbie to crypto,have you wonder why does a(most of the) CEX/s needs KYC when you create an account on their platform? Even most of us crypto traders/investors don't know the reason. But we all should know the reason behind this.
Well, there are several factors that you may consider as to why most crypto exchanges require KYC when creating an account on their platform.
Some of them are,
Security: One of the main purpose of KYC is Security. Exchanges store sensitive user information, including personal data and financial details. KYC helps to secure environment by reducing the chances of unauthorized access or hacking incidents.
Regulatory: Another reason is the need for exchanges to comply with anti-money laundering and counter-terrorism financing regulations imposed by governments. Actually this is the reason why most exchanges implement must KYC rule for users.
Mitigation of Risk: Actually there are a lot of risk managing a crypto exchange. There are chances of fraud, identity theft, and other illegal activities. That is why most of the exchanges implement KYC for the users.
There are some others factors for using KYC for a CEX such as User protection, Reputation etc.
Although KYC may seem like an inconvenience for some users but it plays a crucial role in safeguarding the integrity and security of both the exchange and the wider crypto ecosystem. Btw, do you feel comfortable while completing KYC?