Coinbase’s recent data breach is prompting renewed calls to remove Know Your Customer (KYC) requirements in licensed cryptocurrency exchanges

The recent data breach at Coinbase has exposed 70,000 users' personal data, sparking renewed calls to rethink Know Your Customer (KYC) requirements in licensed cryptocurrency exchanges. The breach was facilitated by bribed Coinbase customer service agents in December 2024. Critics argue that KYC systems, designed to curb fraud and money laundering, have become a flawed gatekeeper, exposing everyday users to security risks while determined attackers find ways around the system.

Some experts suggest replacing KYC with modern innovations like zero-knowledge (ZK) tech, which can verify user identities without revealing underlying data. However, others argue that KYC will continue to persist due to regulatory requirements and the risk of crypto becoming a tool for crime. In the meantime, users are advised to follow best practices to maintain a clean digital footprint and protect themselves from potential physical risks.