Definition
KYC, short for Know Your Customer, is a compliance process used to confirm the identity of individuals or businesses before allowing them to access financial services. In the crypto context, it is commonly required by centralized exchanges and other regulated platforms to meet legal and regulatory standards. The process typically involves collecting information such as name, address, date of birth, and government-issued identification documents. KYC is closely linked to AML and broader Regulation designed to prevent misuse of financial systems.
KYC requirements often apply when users interact with a CEX, connect a Wallet to a regulated platform, or use a Fiat On-ramp to convert traditional money into crypto. By verifying identities, KYC helps platforms assess risk and maintain records that may be needed for regulatory reporting. While the exact details can vary by jurisdiction, the core concept remains the same: establishing that a real, identifiable person or entity is behind an account.
Context and Usage
In practice, KYC is a foundational concept in modern financial compliance frameworks, especially where crypto touches traditional finance. It is a key part of how platforms align with AML rules and other forms of Regulation that aim to detect and deter illicit activity. KYC policies define what information must be collected, how it is verified, and when additional checks are required.
Within the crypto ecosystem, KYC is most visible on services that handle custody of user funds, facilitate trading on a CEX, or provide a Fiat On-ramp between bank accounts and digital assets. Even when a Wallet itself does not require identity checks, the services it connects to may still enforce KYC rules. As a concept, KYC represents the shift from fully anonymous financial activity toward identity-linked access in regulated environments.