Know-Your-Customer (KYC) measures are among the topics which the crypto community treats with a lot of controversy.
Many users don’t want regulations breathing down their necks – to them sharing personal data goes contrary to the basic premise of cryptocurrencies.
The point of KYC is to confirm that a customer is who they claim to be and to prevent illegal activities, such as money laundering, funding terrorism, and tax evasion.
If a crypto exchange doesn’t perform KYC, then it could be liable for those kinds of illegal activities.
Just as one potential example – when a user for some reason can’t access their account on a crypto platform, following proper verification allows the platform to restore logging access. Without any customer data available service providers would not be able to assist their clients efficiently.
How KYC works
Every crypto exchange handles KYC a bit differently. But typically you will need to provide the following information during the KYC process:
- Date of birth
- Physical address
- U.S. citizens may have to enter their social security number
Additionaly, exchanges also generally ask for a photo of valid government-issued identification. This can be a driver’s license, ID card, or a passport.
After you provide the requested information and a photo of your ID, the exchange will use that to verify your identity. This can take anywhere from minutes to several business days depending on the exchange and how busy it is.
There can be situations where a crypto exchange requires additional verification. In that case, you may need to provide proof of your physical address or a selfie.
Can I buy Crypto without KYC?
You can, but it’s more complicated and potentially riskier than using an exchange that follows KYC regulations.
The most common ways to buy crypto without verifying your identity are decentralized exchanges and Bitcoin ATMs.
KYC is a requirement you’ll encounter on just about all centralized crypto exchanges. Buyers who prefer to stay anonymous have other options, namely peer-to-peer crypto marketplaces and Bitcoin ATMs.
However, those options tend to be less user-friendly than buying on a quality centralized exchange. They can also cost you more in transaction fees.
It’s best to be prepared to go through the KYC process with an exchange you like.
Fortunately, it’s straightforward and doesn’t take too long. Once you have it completed, you’ll be able to buy crypto without issue.