Users Outrage Over Xapo Bitcoin Platform’s Impractical KYC Processes

Xapo, a widely utilized bitcoin wallet platform and service provider has been criticized for its impractical Know Your Customer (KYC) policies in recent weeks. Users reported various infeasible situations when depositing and withdrawing funds to their bitcoin wallets.

Over the past few years, Xapo has established an active user base with a simplistic and user-friendly application, bitcoin vault service, and bitcoin debit card. As the platform grew larger in size, the company began to strengthen its KYC policies, requiring an increasing amount of personal information from users in the forms of government-issued IDs, face-to-face verification and utility bills.

Users utilizing Xapo bitcoin debit card and vault are mandatory to undergo a complex KYC verification to prove their real identity to the company. This multi-step process includes submission of documents, selfie holding a verifiable license and explicit description of source of income and funds.

It is understandable from a company’s perspective to require information from users when using non-wallet services. Unique bitcoin applications and services provided by Xapo can be subjected to mandatory KYC verification. However, it was recently discovered that Xapo began to require a 6-step KYC process for users initiating simple activities such as withdrawing funds from a bitcoin wallet.

Purpose of a Bitcoin Wallet & Xapo’s Ineffiency

The primary purpose of using a bitcoin wallet to simplistically send and receive payments anywhere, anytime, and at any geographical location with ease. Such simplicity of bitcoin payments separates the digital currency from remittance providers like Moneygram or Western Union that require users to fill long forms with extensive personal and financial information.

Ideally, bitcoin wallet should simply allow users to send and receive payments at their convenience, without interfering with the process.

Related Post

Earlier this week, users outraged over Xapo’s demand on extensive KYC verification for wallet users. Users that failed to comply with the KYC requirement were locked out and disabled from making any payments.

“I was very annoyed that they would not even allow me to access my bitcoin deposited with Xapo until I uploaded documents and went through this multi-step KYC process. Why let me deposit in the first place if you’re only going to ask for documentation and refuse to allow withdrawal later? It’s like holding the funds hostage,” a user stated.

Importance of Non-Custodial Bitcoin Wallet

A similar issue emerged in South Korea, when a local user tried to use Coinplug to receive bitcoins from a relative abroad. An expat worker in the US initiated a payment to his grandparents located in South Korea. Coinplug later blocked the bitcoin account of the worker’s grandfather without sending any form of notification because they believed he was simply “too old” to understand bitcoin. In other words, they assumed that another person was using a false identity to receive the payment because the owner of the account was in his 70s.

These issues always emerge with bitcoin exchanges and service providers with centralized infrastructure. It is important to utilize non-custodial wallets that do not keep user funds and passwords. Blockchain or Blockchain.info for instance, is a non-custodial wallet which doesn’t have control over user funds and accounts. Thus, the company can’t shut down an account even if it was pressured.

If you liked this article, follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin, cryptocurrency, and technology news.

Joseph Young

Joseph Young is a finance and tech journalist based in Hong Kong. He has worked with leading media and news agencies in the technology and finance industries, offering exclusive content, interviews, insights and analysis of cryptocurrencies, innovative and futuristic technologies.

Share
Published by
Joseph Young

Recent Posts

Retail Traders Panic Sell During ‘Fake Dip’; Whales Hold Tight to SOL, DTX, and SHIB for a Millionaire-Maker Bull Run

Solana (SOL): A Strong Ecosystem Despite Volatility Solana (SOL) has been all over the place…

21 mins ago

Llama 3.2 Predicts Price For Dogecoin: $2 Peak By 2025 And $5 Rally For DTX Exchange This Winter

Cryptocurrency trends are keen on the forecast that was recently released by Llama 3.2 model…

1 hour ago

Crypto Whale Sparks 8x Surge In $OPK Price with Massive Buy-in

A mysterious crypto whale, who previously invested 9,600 SOL into tokens $Pnut and $FRED, has…

3 hours ago

Early ENS Investor Transfers $2.47M To Binance Amid Upcoming Token Unlocks

An early investor linked to the $ENS token recently transferred 154,000 ENS tokens, valued at…

3 hours ago

Wintermute’s Memecoin Strategy: BABYDOGE Ranks Among Top 3 Holdings

In a surprising turn, $BABYDOGE has climbed to the top three in Wintermute’s memecoin holdings…

3 hours ago

$Pnut’s Meteoric Rise: How A Tragic Squirrel Inspired A Memecoin Sensation

The $Pnut memecoin recently soared past a $120 million market cap, creating unexpected wealth for…

3 hours ago