Why You Must Complete Identity Verification to Open a Cryptocurrency Exchange Account

Many users feel a strong aversion when they find out that they must complete identity verification upon registering at cryptocurrency exchanges. For example, from personal experience, we are often reluctant to disclose our identity information to trading platforms—why do we need to go through facial recognition verification? Wasn't the initial appeal of cryptocurrency its anonymity and untraceability? Why is real-name authentication still required for purchasing digital assets? Even more concerning is that withdrawing funds from a real-name exchange inevitably leaves a traceable path. Some ransomware even publicly disclose Bitcoin wallet addresses in an attempt to evade law enforcement tracking.

When we conduct real-name verification to buy and sell Bitcoin on exchanges, is there a risk of identity information leakage? Will sensitive data such as the phone number, ID card, and Google email bound during registration be resold by the trading platform? These questions not only raise doubts about the purpose of information collection but also make users worry about privacy security. This article will delve into these core issues.

Why do cryptocurrency exchanges enforce KYC verification?#

Through the following typical cases, we can clearly understand the regulatory logic:

HSBC was fined $1.9 billion for failing to implement anti-money laundering measures. The case involved Mexican and Colombian drug lords laundering money through its system, and even more shockingly, the bank provided financial services to terrorist organizations and sanctioned countries like Iran and North Korea. Similarly, Standard Chartered was fined $132 million by the UK's Financial Conduct Authority for similar violations, with the money laundering scale reaching as high as $265 billion.

Traditional financial institutions face strict regulations, and cryptocurrency exchanges, as intermediaries between fiat currency and crypto assets, must also strictly implement AML (Anti-Money Laundering) and KYC (Know Your Customer) systems. If exchanges allow money laundering activities, they face hefty fines at best and criminal liability at worst. From the perspective of platform operation: if a comprehensive user authentication system is not established, when law enforcement agencies request information on involved accounts, the exchange will find itself in legal trouble due to data deficiencies.

Is there a risk of identity information leakage at exchanges?#

Responsible mainstream trading platforms typically do not actively leak user information for three reasons:

Taking South Korea's leading exchange Upbit as an example, it was investigated for failing to implement strict verification on 500,000 to 600,000 accounts, leading to a dramatic drop in user trust. This warns us that the credibility of exchanges is far more valuable than the short-term benefits of selling data; compliant operations are the foundation for survival. However, the following potential risks should be noted:

Telecom operator data monitoring: The phone number bound to the exchange may have its SMS content monitored by the operator, thereby linking to user trading behavior.
Malicious VPN spying: Free VPNs often come with backdoor programs that can intercept account information transmitted by devices in real-time.
Third-party data breaches: If the authentication service providers partnered with the exchange are hacked, user information may be leaked.

How to choose a compliant trading platform?#

Mainstream exchanges worldwide are accelerating their compliance processes:

OKX: Holds the first VASP license in Dubai and MAS certification in Singapore.
Binance: Obtained operating licenses in multiple countries, including Dubai and France.
Bitget: Strengthened compliance layout through the acquisition of the licensed Hong Kong institution OSL Group.
Bybit: Acquired dual licenses from Dubai ADGM and the Netherlands DNB.

The common feature of these platforms is that obtaining licenses requires meeting strict regulatory requirements, far from the low-cost registration qualifications of US MSBs. It is recommended to prioritize trading on such licensed exchanges.

If you have not yet registered an account on a mainstream platform, here are two recommended options:

1. OKX or Alternative Entry #

Asset Management: $17.1 billion (latest valuation in 2025)
Trading Variety: 620+ trading pairs (continuously adding emerging assets)
Daily Trading Volume: $16.05 billion (top three in global liquidity)
Core Advantage: Early investment from Silicon Valley's Tim Draper, providing a full ecosystem of services including spot, futures, and DeFi, with a leading market share in Asia.

2. Binance #

Asset Management: $12.85 billion (solidified industry leader position)
Trading Variety: 780+ trading pairs (covers the most comprehensive investment targets)
Daily Trading Volume: $19.025 billion (ranked first in global trading volume)
Core Advantage: A crypto empire built by founder CZ, the preferred platform for 150 million users, requires VPN usage.

High-Frequency Search Keywords#

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