Know-Your-Customer (KYC) is a crucial measure in the crypto world, aimed at identifying customers and assessing their risk levels to prevent illicit activities 🕵♂️💼. KYC was first introduced in the US and became mandatory for all financial institutions in 2002. In 2019, crypto exchanges also adopted KYC and anti-money laundering measures after being classified as money service businesses 🏦💰.
KYC in crypto involves verifying customers’ identities during or after the onboarding process. Crypto exchanges may request immediate identity verification or limit access to certain features until verification is completed 📝🔒. The KYC process consists of three main components: the customer identification program (CIP), customer due diligence (CDD), and ongoing monitoring 🧾🔍.
The CIP requires basic information like name, date of birth, and government ID. CDD involves screening these details to verify identity and risk profile. Ongoing monitoring ensures that the customer’s risk profile remains consistent over time 🔄👀.
Implementing KYC in crypto exchanges reduces the likelihood of crypto crimes and adds transparency and legitimacy to the space 🚫🔮. Despite some criticism that KYC undermines the anonymity of crypto, its benefits are undeniable. As regulations tighten, more crypto exchanges are expected to adopt KYC measures in the future 📈🌐.
FAQs reveal that KYC requirements vary across exchanges, with centralized exchanges typically requiring KYC, while decentralized ones do not. Verification times can range from minutes to days, depending on the exchange and the documentation provided 🕐📊.
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