Comment
Author: Admin | 2025-04-28
Financial service providers in most jurisdictions must collect certain information about their customers to comply with regulatory requirements. Collectively, these requirements are called Know Your Customer (KYC) and include identity verification. KYC in crypto follows similar rules to those for opening a bank account.In this guide, we’ll answer the question, “What does KYC mean in crypto?” We’ll also detail the basic steps involved as well as some alternatives, including decentralized exchanges and peer-to-peer transactions. Let’s start with an overview of KYC itself and how the process works when buying crypto through exchanges.What is (Know Your Customer) KYC?KYC is part of a larger set of compliance rules centered around anti-money laundering (AML) and combating the financing of terrorism (CFT). At its core, KYC verifies the identity of customers. However, additional compliance rules also require enhanced due diligence and ongoing monitoring.Rules and governing bodies differ by jurisdiction, although many countries require financial services providers to collect customer information and verify their identity. For example, in the US, the Bank Secrecy Act (BSA) requires a financial institution to complete KYC. FINRA (Financial Industry Regulatory Authority) members are also governed by FINRA Rule 3310, which defines KYC requirements regarding AML.Know Your Customer requirements serve a goal of making transactions and markets safer by reducing unwanted behavior like financial crime, money laundering, and terrorism financing.How Does The KYC Process for Crypto Exchanges Work?So, what is KYC in crypto, and does it differ from KYC processes in other financial services? In the US, centralized crypto exchanges are money services businesses (MSBs), a category of businesses that includes money transmitting. Coinbase, the largest publicly traded exchange, is registered as an MSB with FinCEN.Under the Bank Secrecy Act, MSBs must comply with KYC regulations, which means that these companies need to collect information about their customers and verify each user’s identity. In March 2024, the US DOJ charged the Kucoin exchange with violations of the Bank Secrecy Act and charges related to unlicensed money transmission.While the KYC process varies slightly from one exchange to the next, they all follow a similar flow because they collect similar information. Let’s walk through the basic steps.1) Collect Basic Personal InformationWhen you buy crypto through a KYC-compliant exchange, the first questions during the signup process center on basic personal information, including your name and address.Age 18 is the minimum age to buy crypto in most jurisdictions around the world. However, this requirement
Add Comment