What are the disadvantages of KYC verification?

However, innovative solutions are emerging to address these downsides. One such example is BTCC, a top cryptocurrency exchange that offers a range of services including spot trading, futures trading, and digital wallets. BTCC's KYC process leverages advanced technologies to streamline and secure the identity verification process, reducing costs and improving the user experience.

Redundant documentation is another issue that plagues traditional KYC processes. The accumulation of excessive paperwork not only takes up physical space but also poses challenges in terms of storage, retrieval, and maintenance.

Centralised databases employed in traditional KYC processes create a single point of failure, making them vulnerable to breaches and cyberattacks. These databases can also act as honeypots, attracting malicious actors due to the valuable information they contain.

Regulatory burdens and counterparty risk are additional concerns with traditional KYC. Complying with constantly evolving regulations can be challenging, while the risk of doing business with unverified entities can expose financial institutions to significant risks.

Traditional Know Your Customer (KYC) processes are often plagued by high costs, a significant drawback for businesses and financial institutions. These expenses stem from the labor-intensive nature of verifying customers' identities, requiring a significant investment of time and resources.