A crypto exchange makes up a crucial aspect of the crypto market. Cryptocurrency exchanges take the form of financial institutions in the blockchain space, which may be decentralized or centralized, that is focused on offering token holders access to trading and exchange options. Centralized cryptocurrency exchanges are quite popular, and they are designed to allow crypto enthusiasts to exchange one token for another or a fiat currency. Sometimes, they may offer trading options like futures trading, margin trading, and much more. A typical centralized exchange request for basic verification or a mandatory KYC Verification process. This may flout the basic principles of blockchain technology, which are decentralization and anonymity. An example of a centralized crypto exchange is Binance.
Binance is one of the largest centralized cryptocurrency exchanges in existence, with a large number of existing users and new users signing monthly. The cryptocurrency exchange started with the claims that it would offer decentralized services to people globally. It worked for them initially, but that started to change, as more countries and their governments became interested in cryptocurrency and blockchain technology. At the moment, different countries from the United States down to Kosovo are altering their public policies, as a way of regulating cryptocurrency and its usage. These regulations have continued to affect the likes of Binance negatively. To be in line with these guidelines released daily by different governments, a few months ago, in 2021, Binance, introduced a mandatory KYC compliance process.
While doing the mandatory KYC process, the user will also carry out Anti Money Laundering AML processes. Binance has continued to improve its robust KYC systems, as a way of complying with the guidelines of different jurisdictions. Is it possible to trade on Binance without KYC?
Before anyone can use Binance, at the moment, they have to undergo an immediate KYC verification process, which is obtainable in regulated financial institutions. In the past, a user could perform limited transactions such as a daily withdrawal limit without an identity verification process, but that seems to have changed.
A brief history of Binance
Binance, one of the biggest crypto exchanges came into existence in 2017, and it was registered in the Cayman Islands. It is an exchange that caters to global users, as long as cryptocurrency and Binance usage are not banned in the region. According to CoinMarketCap, Binance has a 24 hours trading volume of $49,993,443,070.07, as of the time of writing this.
The crypto exchange was able to grow with little or no interference from regulatory authorities because only a few countries were interested in this digital currency. To many, cryptocurrency and blockchain technologies were a fad, but times have changed. Big financial institutions and regulators have realized the importance of this digital currency and cryptocurrency exchanges.
In 2019, the US government placed a ban on Binance and its operations in the country. Binance responded by creating a unique exchange that adhered to the US laws and guidelines, then christened it as Binance.US. It is separate from Binance, and registered with the United States Financial Crimes Enforcement Network. To operate successfully in the US, the independent exchange follows the guidelines. Only those based in the United States can use Binance.US and a complete intermediate verification is compulsory. The United Kingdom has also placed a ban on Binance’s activities. As of the time of writing this, Binance is working to create a unique variant that will comply with the guidelines of the UK authorities.
As expected, new users will have to carry a Know Your Customer process before they can utilize Binance products, if the authorities assent to it. As a licensed exchange, it means that Binance will secure consumer information from intruders, but will treat users’ private information with levity if the government or similar local regulators request for it. This means that Binance won’t maintain the anonymity of its users concerned. With this feature, the underlying blockchain concept of anonymity has been defeated.
Did Binance always have mandatory KYC procedures?
When Binance began in 2017, it claimed that it was offering decentralized financial services that were free from government intervention, but the story seems to have changed with what is obtainable on the cryptocurrency exchange. In the past, Binance users could utilize the services without KYC information and maintain anonymity throughout the process. Without KYC, they could not receive uninterrupted access to service offerings, as they had to deal with a daily withdrawal limit. Now, crypto enthusiasts can’t access any feature on Binance without KYC. Immediately a user begins their sign-up process on Binance, they are asked to submit an appropriate identity card, and proof of residency.
Can you trade on Binance without KYC?
The short answer to the aforementioned question is ‘no’. One of the first things that potential user is asked to do before they are allowed into Binance is to identify themselves. The KYC procedure is mandatory and stringent, which is similar to what is obtainable in Coinbase. Without the KYC/ AML process, the potential user is locked out of the service offerings. Based on the jurisdiction that you live in, Binance may have to publish the identity and transactions of a user if requested by the local regulators. Does this mean that there are no trading alternatives that do not request personal information? At the moment, there are secure and innovative custody-free trading platforms that allow users to trade without passing through any KYC process. An example is our exchange, Whalesheaven.
What are the effects of Binance’s stringent Know Your Customer procedure?
When Binance announced that it was making its KYC procedure compulsory for every user, it discouraged many, and over three per cent of its clientele base left the exchange and opted for more decentralized and anonymous options. Though the remaining stayed, a large per cent of them use Binance and decentralized exchanges.
What are the alternatives of Binance without KYC procedures?
With the decision made by Binance to instil a stringent and compulsory KYC/ AML procedure, people have craved for alternatives that maintain anonymity, while they trade. Cryptocurrency has blossomed because of different reasons, but a crucial one is its anonymity. People can send money, trade, and do other financial activities in privacy and anonymity. With these changes occurring in the likes of Binance, it may be discouraging to many.
There are alternatives to Binance without KYC procedures. These options can be used without the user thinking of submitting their personal information to anyone. Usually, the trades are done in privacy between different parties.
Peer-to-peer Exchanges: A Case Study of Whalesheaven
Peer-to-peer exchanges are crypto exchanges, where different participants interact with one another, without the intervention of any centralized body. Usually, a seller of cryptocurrency seeks a buyer on the platform, and they make the exchange in a secure environment. This brings to mind our secure crypto exchange called, Whalesheaven. Unlike other exchanges, we do not request our users to submit their private information or undergo any KYC requirements.
As a Peer-to-peer custody-free exchange, users can exchange cryptocurrencies from small to large volumes with the highest possible deal protection. Traders are allowed to buy and sell private and stable coins against Ether or Bitcoin with the best rates. Every trade that is done on our exchange, Whalesheaven, is without the control of a third party. This means that we neither hold your funds nor decide on who you trade with, at any point in time.
Using Whalesheaven is as simple as reciting the alphabet, as the user interface was designed to be used seamlessly by both new and professional traders. The trading fees on Whalesheaven are the cheapest, at the moment, allowing users to enjoy the maximum level of profit possible. Withdrawals of cryptocurrency to any wallet are free on our custody-free exchange. We are different from other exchanges that request fees to allow their users to withdraw cryptocurrencies. Using our crypto exchange doesn’t come with any withdrawal fees or limits on the platform.
WhalesHeaven allows crypto enthusiasts to trade large volumes of coins without affecting the market conditions. It offers a shield that reduces the volatility when a user decides to sell their cryptocurrencies. Typically, when a large number of coins are sold in the crypto market, the market is affected negatively. Bouncing off the basic Economics law of demand and supply, the higher the supply of an item, the lower its value. This plays into why the value of a coin may reduce if a whale disposes of a large amount of it. To reduce this volatility, using Whalesheaven is not a bad idea.
On our exchange, users can automate their trading process by enabling WH Cypher. Security is topnotch on Whalesheaven, as it uses multisig wallets to provide the best-decentralized protection for your funds that is available today.
Users can create an auction, choose the volume, make an appealing offer and submit it to the platform. Potential buyers will send their offers to the seller. The seller is alerted of the offers through different contact options that they choose. Once this is done, they can finish the trade.