If you are new to the world of cryptocurrency, KYC is a term that you will hear often. KYC stands for Know Your Customer and it is the process of verifying your customer’s identity. KYC has become important because some exchanges require KYC in order to use their services. This article will discuss what KYCs are, why they’re required on crypto exchanges, and how they work.
What is KYC
KYC is a process that is used by businesses to verify the identity of their customers. KYC has become an important part of the cryptocurrency world because some exchanges require it in order to use their services. KYCs are used to prevent money laundering and other illegal activities.
Two Types of KYC
There are two types of KYCs: basic KYC and enhanced KYC. Basic KYC is a simple way for an exchange to identify their customers, but it doesn’t go into much detail about the customer’s identity or relevant information. On the other hand, enhanced KYCs provide more in-depth verification that includes detailed identification documents such as passports and utility bills.
KYCs are also used to confirm whether or not the customer is using their real identity when they sign up for an account on a crypto exchange. KYC processes can take anywhere from minutes to weeks, depending upon how quickly an exchange’s support team responds and confirms your information with you.
KYC and Crypto Exchanges
KYC policies vary by crypto exchange; some exchanges do not require KYC at all, while others only require basic KYC. However, most exchanges now require enhanced KYC in order to trade on their platforms.
The main reason that exchanges require KYC is to prevent money laundering and other illegal activities. By verifying the identity of their customers, exchanges can be sure that they are not conducting business with criminals or terrorists. KYC is an important step in creating a safe and secure environment for cryptocurrency trading. If an exchange does not perform KYC, then it could be liable for those kinds of illegal activities.
Some crypto exchanges require KYCs in order to use their services, which are either basic KYC or enhanced KYC depending upon how detailed they need to be. Exchanges have implemented KYCs because it helps prevent illegal activities such as money laundering and fraud by confirming that customers aren’t using fake identities. KYC is an important part of the cryptocurrency world and should be done by all exchanges to ensure a safe and secure trading environment.