KYC

KYC, short for “Know Your Customer,” is the process by which a regulated financial service verifies the identity of its users before letting them transact.

How it works

To pass KYC, a user typically submits identification such as a government ID and proof of address, which the provider checks against official and sanctions databases. It is part of broader anti-money-laundering (AML) rules. Centralized exchanges generally require KYC, whereas self-custodial wallets and decentralized protocols usually do not.

Why it matters

KYC is where crypto meets traditional regulation: it helps prevent fraud and illicit finance and is mandatory for most regulated platforms, but it also reduces the anonymity some users value. The tension between compliance and privacy is a recurring theme in the industry.

Example

Signing up to a regulated exchange usually means uploading an ID photo to complete KYC before you can trade.