KuCoin Reports 77% Decline in Bitcoin Reserves Since KYC Became Mandatory

Since KuCoin made KYC verification mandatory in 2023, the exchange has lost around 14,000 BTC—77% of its Bitcoin reserves. This wasn’t a slow bleed; the drain started within weeks of rumors hinting at the clampdown.

In response, a wave of users—many unwilling to compromise on privacy—moved their holdings to personal wallets, signaling a broader pushback against increasing identity scrutiny in crypto.

Unsurprisingly, KuCoin’s liquidity took a hit in the process.

Data from Onchain School shows that thousands of coins were funneled into wallets disconnected from any centralized exchange. This wasn’t a redistribution within the crypto exchange landscape—it was an exodus into self-custody, a vote of no confidence in custodial oversight.

As of July 2025, KuCoin will enforce mandatory KYC for all new users. Existing customers who fail to verify their identities will be restricted from accessing key functionalities on the platform. This tightening of policy has further fueled asset withdrawals.

The ongoing outflows have significantly reduced the exchange’s Bitcoin holdings—dropping from 18,300 BTC to approximately 4,100 BTC—prompting unease among current users regarding the platform’s long-term stability. 

Many KuCoin users are expected to switch to:

• platforms with lighter verification policies,
• p2p trading systems,
• decentralized, anonymity-oriented services.

While it’s true that the long-term trend of declining BTC reserves on CEXs is observed across the industry, KuCoin’s case is extreme. The timing and magnitude of this outflow strongly correlate with the enforcement of KYC,

Onchain School commented.

Several users have pointed out that reduced liquidity left them selling assets at a discount. Automated trading systems, which rely on stable market depth, were hit especially hard—many had to suspend activity and revise their strategies to cope.

Behind it all lies a familiar motive: a significant share of BTC holders continue to reject KYC requirements as a way to safeguard their anonymity.

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Faced with growing regulatory scrutiny, KuCoin has framed its policy overhaul as a necessary adaptation to remain viable in a compliance-driven environment. According to its leadership, the introduction of stricter KYC and AML rules is part of a broader effort to satisfy global legal norms without alienating long-standing users.

The pivot came after a sharp blow in early 2024, when the U.S. Department of Justice accused the company’s parent entity of violating AML/KYC financial transparency laws—demanding $297 million in penalties and a two-year exit from the United States.

KuCoin has outlined several upcoming initiatives:

• automate KYC checks specifically for brokers,
• roll out new offerings like derivatives and staking,
• and refine the platform experience for its trading community.

The current situation illustrates the built-in tradeoff facing centralized exchanges: user retention versus regulatory compliance. Whether KuCoin can recalibrate efficiently and communicate effectively will determine its path forward under stricter international oversight.

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