Crypto glossary
KYC (Know Your Customer)
KYC, or Know Your Customer, is the process financial firms and crypto exchanges use to verify a customer's identity before letting them use their services.
A typical KYC check asks for a government ID, a selfie or video to confirm the person matches the document, and sometimes proof of address. For larger amounts, firms may also ask where the funds come from. The data is checked against sanctions lists and politically exposed persons databases.
KYC is a core part of anti-money laundering rules. Centralized exchanges, custodians and fiat on-ramps must apply it in most jurisdictions, and in the European Union MiCA and the transfer of funds regulation tie crypto providers to the same standards as banks.
Critics point to privacy costs and data breaches, since exchanges store large amounts of sensitive personal data. Decentralized protocols and self-custody wallets generally do not require KYC, although regulators continue to debate how far the rules should reach.
Example
To withdraw euros from a European exchange, a user uploads a passport photo and records a short selfie video. Once the identity check passes, the account limits rise and bank withdrawals are enabled.
Related terms
Latest articles on KYC
- Routine KYC or Risk-Based Checks? How Instant Crypto Exchanges Approach Verification
- XRPL Proposal Targets KYC-Only Liquidity Pools for Banks
- SEC’s Hester Peirce Pushes Slimmer Crypto KYC Without Full Identity Files
- ZachXBT Slams KYC and Warns He May Expose Ways to Evade Online Tracking
- New AI Cybercrime Kit Uses Deepfakes to Breach Crypto and Banking KYC Systems
