
KuCoin announced that it will impose dormancy fees on inactive non-KYC (Know Your Customer) and non-KYB (Know Your Business) accounts starting July 15, 2025. This policy targets unverified accounts to enhance platform security and comply with regulatory pressures. US users, along with those in restricted regions like mainland China, cannot complete KYC/KYB verification due to KuCoin’s Terms of Use and local regulations.
As a result, they are urged to withdraw their assets to self-custody wallets or other exchanges to avoid these fees. KuCoin will notify affected users before deducting fees, giving them time to act. Transfer assets to an external wallet (e.g., a non-custodial wallet like Best Wallet) or another exchange. KuCoin supports crypto withdrawals without KYC, though limits apply (e.g., 2 BTC daily for non-KYC accounts).
After withdrawing, consider closing your KuCoin account to avoid future fees. Notifications will be sent, but users should move assets before fees are applied on July 15, 2025. KuCoin’s withdrawal fees vary by cryptocurrency and network (e.g., 0.0002 BTC for Bitcoin, 1 USDT for Tether on TRC20). Check the withdrawal page for current fees. US users face restrictions due to KuCoin’s lack of a US license, limiting access to fiat withdrawals and advanced features without KYC. Using a VPN to bypass restrictions is risky and may lead to frozen assets.
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This move aligns with global trends toward stricter KYC enforcement to combat fraud and money laundering. KuCoin’s introduction of dormancy fees for non-KYC accounts and its urging of US users to withdraw funds have significant implications for users, the crypto industry, and the broader divide between centralized exchanges (CEXs) and decentralized finance (DeFi). Dormancy fees will erode funds in inactive, unverified accounts, disproportionately affecting users who hold small balances or use KuCoin sporadically. Exact fee details are unclear, but they could be flat or percentage-based, similar to other platforms (e.g., Binance’s 0.0005 BTC monthly fee for inactive accounts).
Non-KYC users must either withdraw assets, incurring withdrawal fees (e.g., 0.0002 BTC for Bitcoin), or complete KYC where possible. For US users and those in restricted regions (e.g., mainland China), KYC isn’t an option, pushing them to exit the platform. Users who avoid KYC for privacy reasons may feel pressured to abandon KuCoin, potentially migrating to DeFi platforms or other CEXs with looser policies (e.g., MEXC, though it also enforces KYC in some cases).
KuCoin’s lack of a US license already limits US users’ access to fiat withdrawals and advanced features. The dormancy fees and withdrawal urging effectively signal a soft exit from the US market, aligning with regulatory scrutiny from agencies like the SEC and CFTC. Rushed withdrawals increase the risk of errors (e.g., sending funds to incorrect addresses or incompatible networks). Users without self-custody wallets may struggle to find secure alternatives, especially if unfamiliar with DeFi or other CEXs.
Withdrawing assets may trigger taxable events in the US, depending on the user’s cost basis and holding period. Users must track transactions for IRS reporting, adding complexity. The policy reflects KuCoin’s efforts to align with global anti-money laundering (AML) and counter-terrorism financing (CFT) regulations, especially after facing scrutiny in jurisdictions like the US and India. By penalizing non-KYC accounts, KuCoin reduces exposure to illicit activity risks.
Dormancy fees could generate additional revenue from inactive accounts, offsetting operational costs or regulatory fines (e.g., KuCoin paid $22 million to settle a NY lawsuit in 2023). KuCoin may lose privacy-focused users but attract institutional or KYC-compliant traders, aligning with its goal of becoming a regulated, mainstream platform. KuCoin’s move signals a broader industry trend toward stricter KYC/AML enforcement, driven by global regulators like FATF. Other CEXs (e.g., Binance, Coinbase) may follow with similar policies, shrinking the space for non-KYC trading.
Disaffected users may migrate to decentralized exchanges (DEXs) like Uniswap or PancakeSwap, which don’t require KYC. However, DeFi’s complexity and risks (e.g., smart contract vulnerabilities) could deter mainstream adoption. As CEXs diverge based on regulatory stances, users may face a fragmented landscape where access to liquidity and services depends on their jurisdiction or KYC willingness.
Centralized (CEXs like KuCoin) prioritize regulatory compliance to operate legally, attract institutional investors, and integrate with fiat systems. KYC, dormancy fees, and user restrictions (e.g., US bans) are tools to achieve this, but they alienate privacy advocates. Decentralized (DeFi, DEXs) emphasize user control, anonymity, and censorship resistance. Non-KYC users pushed out of KuCoin may turn to DeFi, but barriers like technical complexity, high gas fees, and regulatory risks (e.g., Tornado Cash sanctions) limit accessibility.
The divide deepens as CEXs become gatekeepers for fiat on-ramps, while DeFi remains a niche for tech-savvy or ideologically driven users. This could slow crypto’s mainstream adoption if users feel trapped between compliance and complexity. Non-KYC users value anonymity to protect against surveillance, data breaches, or authoritarian regimes. KuCoin’s fees and KYC push undermine this, forcing users to choose between financial loss or exposure.
Push for KYC/AML to curb illicit activities (e.g., money laundering, tax evasion). KuCoin’s policy aligns with this, reflecting pressure from global watchdogs like FATF and US agencies. The divide creates a zero-sum game where privacy and regulation are at odds. Users in restricted regions (e.g., US, China) face exclusion from CEXs, while privacy-focused platforms risk regulatory crackdowns.
Those in KYC-friendly jurisdictions (e.g., EU, Singapore) can comply and continue using KuCoin with minimal disruption. They benefit from enhanced security and access to regulated services. Users face exclusion, forced withdrawals, or reliance on risky workarounds (e.g., VPNs). This creates a two-tier system where access to crypto depends on geography.
The divide reinforces inequality in crypto access, favoring users in compliant jurisdictions while marginalizing others. This could fuel demand for DeFi or unregulated CEXs in restricted regions, complicating global regulatory efforts. Bitcoin and early crypto aimed for financial sovereignty and decentralization. Non-KYC users align with this, resisting centralized control.
CEXs like KuCoin bridge crypto and traditional finance, prioritizing compliance over ideology. Dormancy fees and KYC mandates reflect this shift toward centralized control. The divide alienates crypto purists, who may abandon CEXs for DeFi or peer-to-peer trading, while pragmatic users accept KYC as the cost of convenience. This fractures the crypto community’s unity.
KuCoin’s dormancy fees and US withdrawal urging highlight the tension between regulatory compliance and crypto’s decentralized ethos. For users, the policy means financial and logistical challenges, especially for non-KYC and US-based accounts. For the industry, it underscores a growing divide between centralized, regulated platforms and decentralized, privacy-focused alternatives.
This divide risks fragmenting the crypto ecosystem, with access, privacy, and ideology as key fault lines. Users must adapt by securing assets and exploring alternatives, while the industry grapples with balancing regulation and innovation. For specific guidance, US users should withdraw funds before July 15, 2025, and contact KuCoin support for assistance.