Regulation
KYC
Know Your Customer - identity verification procedures required by financial regulations. Exchanges collect personal information like ID documents, address, and sometimes selfies to comply with anti-money laundering laws.
Last updated: January 5, 2025
What is KYC?
KYC (Know Your Customer) is the process of verifying the identity of customers. In cryptocurrency, KYC typically involves submitting personal documents to exchanges before being allowed to trade, deposit, or withdraw funds.
Why Exchanges Require KYC
Regulatory Compliance
- Anti-Money Laundering (AML) laws
- Counter-Terrorism Financing (CTF) regulations
- Banking partnerships require it
- Operating licenses mandate it
Risk Management
- Prevents fraud
- Reduces chargebacks
- Identifies suspicious activity
- Protects the exchange
Legal Requirements by Region
- US: Bank Secrecy Act, FinCEN rules
- EU: 5th/6th AML Directives
- UK: FCA regulations
- Most countries: Some form of KYC required
KYC Verification Levels
Most exchanges have tiered verification:
Level 1 - Basic
- Email verification
- Phone number
- Limited functionality
Level 2 - Intermediate
- Full legal name
- Date of birth
- Address
- Higher limits
Level 3 - Full Verification
- Government-issued ID
- Proof of address
- Selfie/liveness check
- Full functionality
Information Typically Collected
Personal Details
- Full name
- Date of birth
- Nationality
- Residential address
Identity Documents
- Passport
- Driver’s license
- National ID card
Proof of Address
- Utility bill
- Bank statement
- Government correspondence
- Usually within 3 months
Additional Verification
- Selfie with ID
- Liveness detection
- Video verification
KYC on Major Exchanges
| Exchange | KYC Required | Time |
|---|---|---|
| Binance | Yes | Minutes-hours |
| Coinbase | Yes | Minutes |
| Kraken | Yes | Hours-days |
| KuCoin | Limited features without | Varies |
Privacy Concerns
Data Risks
- Exchange hacks can expose data
- Third-party KYC providers
- Government data requests
- Identity theft potential
Mitigation
- Use reputable exchanges
- Enable all security features
- Monitor your accounts
- Consider privacy-focused alternatives
Exchanges Without Full KYC
Some options for limited KYC:
- KuCoin - Basic features without KYC
- DEXs (Uniswap, etc.) - No KYC
- P2P platforms - Varies by seller
Note: No-KYC options often have restrictions on fiat, limits, and functionality.
KYC Best Practices
- Use official apps/websites - Avoid phishing
- Research the exchange - Ensure legitimacy
- Use unique passwords - Per exchange
- Monitor for data breaches - Check haveibeenpwned.com
- Only share what’s required - Don’t overshare
Ready to Start Trading?
Now that you understand kyc, explore the best exchanges to begin your crypto journey.