- The Binance Account Bound Token (BABT) is subject to revocation by Binance and is not transferable.
The biggest cryptocurrency exchange in the world, Binance, has attempted to tackle one of the most challenging issues facing the sector: on-chain identity.
Users who successfully complete Binance’s Know-Your-Customer (KYC) process are given the opportunity to receive a token known as the Binance Account Bound Token (BABT), which serves as proof of completion. After that, users can export the token to other decentralized finance (DeFi) and cryptocurrency tools and protocols, such as mixers.
The concept of Soulbound Token (SBT), which was initially put forth by Ethereum’s developer Vitalik Buterin, is what BABTs are. SBTs, in Buterin’s words, are non-transferable tokens that, within the Web3 ecosystem, symbolize users’ identities and accomplishments.
The three main characteristics of BABTs are as follows: the issuer may revoke them, although they can be minted again in 72 hours; they cannot be transferred between addresses or between individuals.
In November, Binance was forced to pay a $4.3 billion punishment to the U.S. government for violating the nation’s anti-money laundering regulations.
The company’s commitment to collaborating with legislators to enforce KYC/AML is demonstrated by BABTs, which it is implementing in a fashion that leverages blockchain technology.
Not Everyone Is Persuaded
Some users are skeptical about BABTs’ viability.
James McCall on X stated, “This assumes that addresses are 1 to 1 with the person KYC’d and not shared or compromised.” McCall believes this will only create a market for these accounts.
The inventor of Mintable, Zack Burks, believes the idea won’t succeed for a number of reasons. He brought up the Financial Action Task Force (FAFT), jurisdictional distinctions, AML regulations, and the possibility of selling wallets or private keys with a BABT.
Even while this is a great marketing strategy and cool, only Binance partners will participate, so in the end, those partners will be held accountable for using this if authorities come knocking, he wrote.
It’s possible that other businesses are observing how Binance’s innovation benefits them and whether it can offer a more crypto-native means of starting to connect DeFi protocols and centralized platforms.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
