Crypto Exchange Binance to Issue 'Soulbound' Tokens to Users Who Complete Know-Your-Customer Checks

Cryptocurrency exchange Binance plans to issue a "soulbound" token on the BNB blockchain to all users who complete know-your-customer (KYC) requirements, according to an official announcement.

Soulbound tokens, which in this case act as an identity passport across the BNB chain, are unique and non-transferrable. Users who would prefer their identity not be shared across the entire network can opt out of the token.

Read more: What Are Soulbound Tokens? The Non-Transferrable NFT Explained

Binance's soulbound token – named binance account bound (BAB) – will allow users to participate in "building projects" while earning rewards, according to the release.

The concept of soulbound tokens was first discussed in a blog post by Vitalik Buterin, a co-founder of the Ethereum blockchain, in January. He described the new asset class as non-transferable digital tokens that represent social identity in a decentralized society.

The use of KYC in crypto came under intense scrutiny this week when decentralized exchange dYdX prompted its users to complete a "liveness check" using webcam technology, with several users commenting on the antithetical relationship between decentralization and KYC.