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.
- Users typically submit identification such as a government ID and proof of address, which the provider checks against official and sanctions databases as part of broader anti-money-laundering rules.
- Centralized exchanges generally require KYC, while self-custodial wallets and decentralized protocols usually do not, creating a recurring tension between compliance and privacy.
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.
Why do crypto exchanges require KYC?
Do all crypto services require KYC?
What information does KYC usually ask for?
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