Have you gone through KYC verification on exchange? KYC management has become an important procedure of exchange log-in. Almost every reliable exchange forces their customers to through KYC verification. In 2018, a policy was launched where exchanges were bound to identify their customers before assigning them accounts. No user was allowed to access an exchange account with KYC. But you must be curious what KYC crypto is? Let’s see what KYC crypto is and how it works.
What is KYC Crypto?
KYC means know-your-customer or know-your-client. It is the process of customer verification. If you try to log in to any exchange, you need to go through KYC verification. KYC is not a new term even banks and stock exchanges need KYC to sort their customers.
No doubt, decentralized currency is beneficial. Due to the absence of third parties, people can send money easily. But cases of money laundering, funding terrorism, and un-authorize customers also increase. To avoid illegal activities and money laundering, exchanges go through KYC. After Wall Street has stated that exchanges are used for illegal activities like money laundering, user verification became a necessary step.
Most of the exchanges are lenient. They allow users to use accounts without KYC but with some restrictions. Many features remain unlocked. You cannot buy or sell crypto, you can add a specific amount of crypto in your wallet such issues arise without KYC verification.
How does KYC work?
When you start creating an account on any exchange they demand the following piece of information:
- Date of birth
- Social Security number
- Physical address
Exchanges that follow strict KYC usually ask for two further steps:
- You need to provide your identity card number or passport
- You need to submit a photo of yours
After you are done with picture submitting, the form goes for verification. Government verifies the documents and pictures. Usually, users get to know the results through email within three working days.
Can We Buy Crypto without KYC?
Yes, we can buy crypto without KYC. It is safe to opt-in to exchange for crypto. But if you want to avoid a tiring verification procedure then risky options are decentralized exchanges and Bitcoin ATMs.
Decentralized exchange is the one that is not monitored by any central organization. Decentralized exchanges have further two categories: Peer-to-peer marketplaces and automated market makers (AMMs).
A peer-to-peer marketplace offers an open platform for buyers and sellers. One places a bid and the other accepts the offer. But along with easy manipulation, it is a risky option. The probability of scams and money loss starts at 50%.
AMMs use smart contracts for crypto trading. You can trade a pair of crypto coins. Liquidity pools are means of trading in AMMs. Verification is not required in this method. You just need a crypto wallet for storing coins. But exchanges that support AMMs don't allow crypto trade through cash. Most people prefer to buy coins through cash and trader in a wallet. Though you need to pay higher transaction fees on such exchange platforms.
So now you know what KYC crypto is. If we want a safe and sound economic system then KYC is a good contribution. We know that this is a bit tiring step but it will help in clean crypto trading. Activities that abuse society like money laundering will be eliminated. Exchanges need to add KYC in the log-in procedure because big changes start from small differences.