Know Your Customer (KYC)

What is Know your Customer (KYC)?

Know Your Customer, conveniently referred to as KYC, is a compliance process introduced by regulators for companies to check the identity and risk level of their clients. This KYC process typically requires an official identity check using a driver’s licence, passport or ID card.

Which cryptocurrency services usually ask for KYC documents?

• Centralized cryptocurrency exchanges (CEXs e.g. Binance or Kraken)
• Service providers
• P2P platforms
• Cryptocurrency casinos and sportsbooks

Advantages of KYC

• Protection against potential fraud, scams and illegal activities
• Helps to avoid multi-accounts and thus enables more exclusive offers for the verified users

Disadvantages of KYC

• Encouraging identity theft
• Encouraging identity fraud
• Helps scammers to stay undetected when stolen identity documents are used

See also: Decentralized Exchange, Non-Custodial Wallet.