They started as a no KYC option and users were happy to pay 1% for that (on top of vendors rate). Forced KYC is what ruined them. Why pay such high fees when you can go on Binance and pay less?
Can someone please answer me this? I run a P2P crypto exchange built on the Localbitcoins model. We do KYC because its a way to prevent scammers from making multiple accounts.
How do you stop scamming without KYC? How can users be safe without KYC?
Multiaccounting and scamming aren't exactly the same thing. But if you meant fraud when you said scamming, then it's easy to stop that with KYC. Almost impossible without it, unless you are restricted to trading cryptocurrency pairs using a "dumbed down" smart contract.
There will always be fraud associated with crypto-to-fiat and vice versa exchanges though, because you can always just rob the buyer or seller.
Multiaccounting is pretty easy to stop without KYC though. Just make all users verify with their phone number and check their GPS location to make sure that all accounts are created in the same place.