Binance to Use Soulbound Tokens for enabling Decentralized KYC of Wallets

David Millar

August 3, 2022

The popular cryptocurrency exchange Binance has launched BAB, a Soulbound token on the BNB Chain, to create a decentralized solution to the KYC requirements for the cryptocurrency exchanges. Soulbound is non-transferable tokens that are assigned to a particular wallet and are used to indicate social status on Web3. 

As these NFTs are non-tradeable, they can be used to identify the wallet holder on a blockchain network, and the data linked to it can be used to pinpoint recorded actions by the wallet. The token will be called Binance Account Bound (BAB) token and “will certify the wallet owner’s verified user status on Binance and will be also available for use by third-party protocols.”

What Does it Mean for Binance Users?

The ownership of BAB is optional for the Binance users, and the users can choose to complete KYC checks using traditional methods or the Soulbound tokens. Moreover, ownership of the BAB token will only indicate that a wallet owner has cleared the KYC check of Binance and will not record any other user data. However, to record other information, Binance can issue other types of BAB tokens in the future. 

The CEO, Changpeng Zhao, said, 

“Soulbound Tokens will play a significant role in the way web3 credentials will work in a Decentralized Society… We foresee numerous use cases for the BAB token, and we will actively collaborate with the community to develop this revolutionary vision of decentralized society.”

BAB is not the first Soulbound Token in the crypto ecosystem but the first on the BNB Chain. There have been various Soulbound tokens with different utilities but are generally used to identify the user’s identity. The NFT market is brimming with innovation, and Soulbound tokens present unique use cases for the NFTs. 

Soulbound NFTs are a great way to ensure safety of the crypto users and can eventually reduce hacks and losses by making these tokens a replacement for private keys of digital wallets.