A recent CryptoQuant analysis has revealed a dramatic decline in KuCoin’s Bitcoin reserves, highlighting a 77.6% drop in less than two years. The centralized exchange saw a net outflow of more than 14,000 BTC, falling from approximately 18,300 BTC in June 2023 to just 4,100 BTC today.
The KYC Shift That Triggered the Exodus
The sharp decline began after KuCoin implemented a major policy change in June 2023, requiring mandatory KYC (Know Your Customer) verification for all users. This enforcement, aimed at enhancing compliance and regulatory transparency, coincided directly with the start of a steady and prolonged outflow of Bitcoin from the platform.
According to OnChainSchool, a CryptoQuant analyst, the data clearly links the timing of KuCoin’s KYC announcement to the beginning of this downward trend. While it’s true that centralized exchanges overall have experienced a decline in BTC holdings, KuCoin’s case is notably extreme, signaling a significant user response to the new identity verification rules.
“The timing and magnitude of this outflow strongly correlate with the enforcement of KYC,” the report noted.
Regulatory Pressure and Layoffs Add to the Strain
The exchange’s struggles didn’t stop at KYC enforcement. In late 2023, KuCoin also laid off a large portion of its staff and faced several regulatory issues in the United States, including multi-million dollar settlements. These events likely further eroded user confidence and accelerated withdrawals from the platform.
Meanwhile, Binance Strengthens Its Grip
While KuCoin has seen a major decline, Binance has continued to grow its dominance in BTC reserves despite its own controversies, including a multi-billion-dollar DOJ settlement and CEO Changpeng Zhao’s resignation. Yet investor trust appears unshaken, with Binance’s share of total BTC reserves on centralized exchanges increasing to 23%—the highest among its peers.
