Crypto Derivatives Giant BitMEX to Introduce Mandatory KYC for Traders

Seychelles-incorporated crypto derivatives platform, BitMEX will before the end of the month start requiring its customers to submit their personal information for checks. It marks a turnaround for the derivatives giant which has to date not required users to mandatorily provide information that confirms their real identity.

BitMEX will implement its Know-Your-Customer (KYC) process on August 28, 2020, with users having until the next six months to ensure compliance. The new measure according to BitMEX is in a bid to provide a “trusted and secure trading environment for all users.”

The KYC verification process on BitMEX will not be significantly different from what is available on other crypto-related service providers. Individual users will need to upload a photo ID and proof of address, take a selfie and respond to a few multiple-choice questions that reveal their source of funds and trading experience.

However, although KYC verification is fast becoming a standard for crypto trading platforms, the topic of whether or not users have to reveal their identity to service providers remains a controversial topic in the industry.

While these platforms typically have to collect user information to comply with global regulatory standards, others such as Shapeshift CEO, Erik Voorhes argue that it violates the privacy principles embedded into Bitcoin and cryptocurrencies.

It is worth noting though, that despite starting off as a non-KYC platform, Shapeshift was eventually coerced by regulators to enforce the user verification process. With BitMEX arguing being the largest crypto trading platform without a standard-KYC process, it appears user ID verification will become a norm for the industry going forward.

BitMEX acknowledged that change in today’s announcement, mentioning that “user identity verification is increasingly expected in order to meet evolving international regulatory standards, and is an important part of building trust in the cryptocurrency ecosystem.”

Meanwhile, collecting personal information about users put BitMEX’s security standards back into the spotlight. Less than a year ago, the platform suffered a large scale email breach¬†and will need to avoid a repeat with the newly introduced KYC-system.