Crypto Venture News One stop Crypto Track Down 
Financial service providers like crypto trading and exchange platforms face serious pressure to stop illegal activities that are related to the transfer of digital assets and fiat currency. So it is crucial for the users to enter their KYC details while opening an account in a crypto exchange. In this respect, let us see the role of KYC in crypto and why it is so important.
What Is KYC?
KYC refers to Know Your Customer. When the customers create a new account in an exchange, they have to fulfill the KYC verification. It enables the platform to verify the identity of the consumer by gathering required information like the bank statement or official identification.
Abiding by the KYC regulation is a dynamic measure. Providers that offer financial services gather the details of the customers beforehand to ensure that the user is legitimate. Institution prohibits users from making any kind of financial transaction catering to the regulations and requirements of the KYC in crypto. Even if they allow the customers to create an account without KYC, they are restricted from getting complete access to all the operations and benefits of that exchange.
Advantages Of KYC In Crypto
Apart from verifying the identity of the customers, KYC fights malicious practices within the platform which offers several added benefits. These benefits are as follows:
- By creating the identity of the consumer and their financial history, the lenders can predict their risks which further leads to risk assessment and responsible lending.
- KYC fights financial frauds like identity threats.
- As this is a proactive measure, it decreases the risk of malicious activities and fraudulent activities.
- It increases the trust, accountability, and security of the financial service providers.
How KYC Operates In Crypto?
Every digital currency exchange handles KYC in its own way. Here is the list of KYC requirements for cryptocurrency that the user will have to offer during the time of identity verification. These are the same for Binance KYC requirements.
- Date of birth
- Social Security number
- Physical address
Along with that, crypto exchanges also generally look for pictures of valid government offered identity cards. This can be the passport, driver’s license, pan card, Voter’s ID card, etc. After the requested data and picture of the Identification Card has been offered by the user that exchange will use that for the purpose of verification. This can take time anywhere from a few minutes to several business days depending on the exchange that the user is creating an account in. Also, there can be instances where the exchange may require added information for verification. In that case, the user may need to offer the required data as well.
Role Of KYC In Crypto Purchase
You may wonder, can you buy crypto without KYC. Purchasing crypto without KYC can be more riskier and complicated than availing an exchange that abides by the KYC regulations. The most common way to purchase crypto without identity verification is the Bitcoin ATMs and decentralized exchanges. They are known as non KYC BItcoin.
Decentralized Exchange (DEX) is a type of cryptocurrency exchange that allows “peer-to-peer” transactions without the interference of any third party. Most of the cryptocurrencies work on this network as this allows faster, more secure, and low cost transactions. Some popular P2P marketplaces include:
- Bisq
- LocalBitcoins.com
Even though these platforms offer high security measures to stop fraudulent activities, there are still chances of getting scammed and losing all the money. Compared to central digital currency exchange, P2P networks are at more risk. Automated Market Makers (AMM) allows the user to trade pairs of digital currencies and they set the prices of the trades via smart contract. They provide trading via the liquidity pools. Some famous AMMs are:
- Uniswap
- PancakeSwap
- Sushiswap
While AMMs do not need verification of identity, the user will require to already own a crypto wallet with enough funds required for trading. The user cannot purchase crypto using cash on these channels. There are many users who can choose to purchase crypto with cash on a centralized exchange first. Then they can transfer the digital currency to a crypto wallet and connect that to an Automated Market Maker to get access to a broader selection of currencies.
The Bottom Line
While the cryptocurrency KYC process takes effort and time, they are important to keep your digital currencies safe. Know Your Customer (KYC) is a method by which the crypto exchanges get access to all the identification data of the user to ensure that they are legit users and not here for any malicious activity. KYC in crypto does not take much time or effort but is an effective measure for the user’s safety.
Frequently Asked Questions On KYC In Crypto
1. Is KYC Safe in cryptocurrency?
Abiding by the KYC regulation is a dynamic measure. Providers that offer financial services gather the details of the customers beforehand to ensure that the user is legitimate.
2. Does crypto have KYC?
Institution prohibits users from making any kind of financial transaction catering to the regulations and requirements of the KYC in crypto. Even if they allow the customers to create an account without KYC, they are restricted from getting complete access to all the operations and benefits of that exchange.
3. Why is KYC important for crypto?
KYC refers to Know Your Customer. Here the crypto exchanges collect all the identification-related data of the user for security purposes as cryptocurrency deals with money. So KYC in crypto is important.
- The Bitcoin Wallet Boom: Why Demand Is Skyrocketing - 25/11/2023
- How To Choose The Best Crypto Exchange Affiliate Programs - 03/03/2023
- Crypto License: How To Get It Now? - 03/02/2023
