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.

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