KYC
Also known as: Know Your Customer, Identity Verification
A regulatory process requiring businesses to verify customer identities, commonly used by crypto exchanges and financial services.
Know Your Customer (KYC) is a set of standards and procedures used by financial institutions to verify the identity of their customers. In cryptocurrency, KYC is required by most centralized exchanges and regulated platforms to comply with anti-money laundering (AML) laws.
KYC Requirements Typically Include:
Basic Tier: - Full legal name - Date of birth - Email verification - Phone number
Standard Tier: - Government-issued ID (passport, driver's license) - Photo verification (selfie with ID) - Address verification (utility bill, bank statement) - Source of funds declaration
Enhanced Due Diligence: - Required for high-value transactions - Additional documentation - Business verification for companies
Why Exchanges Require KYC: - Legal compliance with regulations - Prevent money laundering - Stop terrorism financing - Comply with sanctions lists - Access banking services
KYC in Crypto:
| Service Type | KYC Required? |
|---|---|
| Centralized exchanges | Yes (mostly) |
| Decentralized exchanges | No |
| Fiat on/off ramps | Yes |
| DeFi protocols | No |
| Licensed custodians | Yes |
Privacy Concerns: - Personal data breaches at exchanges - Government surveillance - Risk of identity theft - Data sold or shared
Alternatives: - Non-KYC peer-to-peer trading - Decentralized exchanges - Bitcoin ATMs (some with limits) - Privacy-focused services
Regulatory Trends: KYC requirements are expanding globally, with many jurisdictions now requiring KYC for DeFi and self-hosted wallets above certain thresholds.