KYC, or Know Your Customer, is a regulatory requirement for businesses, including cryptocurrency exchanges, to verify the identity of their customers. The aim is to prevent illegal activities such as money laundering, fraud, and terrorist financing.
"Most cryptocurrency exchanges implement KYC procedures, requiring users to provide identity documents such as a passport or driver's license."
The KYC process typically involves collecting personal information from the customer, verifying the information against reliable, independent sources, and assessing the customer's risk profile.
"During the KYC process, you may be asked to provide your full name, address, date of birth, and a photo of a government-issued ID."
While KYC procedures can be seen as an invasion of privacy, they are crucial for maintaining the integrity of financial systems and protecting customers from fraud and other risks.
"Despite the inconvenience, KYC procedures help protect both the exchange and its users from fraudulent activities."
* All terms and definitions may update as the Cryptionary improves.