KuCoin’s Bitcoin (BTC) reserves dip 77% as mandatory KYC sparks user exodus

Rumors of KuCoin implementing a compulsory Know-Your-Customer policy began circulating in June 2023. The June 28 confirmation intensified the debates across crypto forums and social media, triggering visible changes in the exchange’s user base. CryptoQuant data shows KuCoin’s BTC reserves started falling after the announcement. The trend persisted, reflecting user worries over privacy, safety of funds, and regulation. The metric dipped from 18,300 BTC in June 2023 to 4,100 BTC in April 2025, which translates to a 14,200 BTC outflow or a 77.6% plunge. CryptoQuant.com @cryptoquant_com · Follow KuCoin loses over 77% of its BTC reserves following mandatory KYC announcement“On-chain data shows a drop from 18,300 BTC to just 4,100 BTC, marking a net outflow of 14,200 BTC — a 77.6% decrease.” – By @onchainschool 8:53 PM · May 5, 2025 184 Reply Copy link Read 16 replies KuCoin’s policy shift triggers user exit The trading platform confirmed the updated KYC requirements, which demanded identity verification for anyone using its services, including depositing and spot and futures trading. KuCoin emphasized the move was essential to guarantee user safety and compliance. The press release highlighted: Starting from July 15, 2023, all newly registered users must complete KYC to access KuCoin’s comprehensive suite of products and services. This requirement ensures a high level of accountability and transparency within the platform. For users who registered before July 15, 2023, failure to complete the KYC process will restrict their access to certain features. However, the community responded by quitting, catalyzing substantial declines in KuCoin’s BTC reserves. Users have withdrawn 14,200 Bitcoin assets since the updated KYC requirements. Moving to self-custody? The staggering Bitcoin outflow from KuCoin highlights a broader change in user preference. As centralized exchanges (CEXs) tighten compliance and KYC policies, individuals seem to shift to platforms promising greater control over user assets and data. Most people, especially in jurisdictions with stiffer digital asset laws or privacy concerns, are moving to decentralized exchanges (DEXs) and custodial wallets. Unwelcoming incidents such as crypto fraud have made users hesitant to share their details unless necessary. Such sentiments reflect the increasing trend toward privacy-focused cryptocurrency tools and decentralized finance (DeFi). Impact on KuCoin While KuCoin affirmed that the KYC changes aimed to prevent unlawful activities and guarantee a secure investment space for users, the declined reserves present significant challenges. Low reserves can impact user trust, drain liquidity, and spark insolvency speculations, which are crucial for any entity to survive the massively competitive exchange marketplace. That explains why some platforms, including OKX and Binance, have opted to delay KYC mandates. Meanwhile, KuCoin’s incident reminds us of the benefits of trust in the tech world. While governments’ involvement has made regulations unavoidable, exchanges should balance user autonomy and compliance. The massive reserve dip reflects the impact of isolating users who prioritize privacy. The case shows users will choose control over convenience in the crypto realm. Meanwhile, KuCoin and other trading platforms should consider regaining user trust without sacrificing compliance. The post KuCoin’s Bitcoin (BTC) reserves dip 77% as mandatory KYC sparks user exodus appeared first on Invezz

Source: Invezz