What is KYC in crypto?
Know Your Customer, is a set of procedures financial institutions implement to collect a customer’s identity.
It helps due diligence in Anti-Money Laundering (AML)
and the financing of terrorism.
Exchange customers may be required to submit additional documentation to verify their identity to comply with KYC regulations. A customer can only set up an account and begin trading once an exchange has verified their identity.
Some risks associated with trading on a non-KYC exchange, including:
Security: Non-KYC exchanges are often less secure than KYC exchanges as they have weaker AML procedures, which makes them more vulnerable to hacks as well as fraud and other criminal activity.
Liquidity: Non-KYC exchanges often have lower liquidity than KYC exchanges, as they are smaller and cater to a smaller customer base, which can make it difficult to find buyers or sellers when you want to trade, resulting in higher fees.
Fees: Non-KYC exchanges often charge higher fees than KYC exchanges as they have to offset the risk of fraud and other criminal activity.
Benefits of crypto KYC:-
Regardless of operational challenges associated with KYC laws, cryptocurrency exchanges stand to benefit greatly from regulatory compliance, including:
Reduced legal risk
By conducting KYC due diligence, businesses can reduce the chance of legal disputes or regulatory fines.
Increased customer trust
Users are more inclined to continue using a service if they are confident the cryptocurrency exchange proactively takes preventative measures to safeguard their accounts.
Reputational damage control
If a hack or data breach occurs, KYC-compliant exchanges are in a better position to prevent fraud and defend their reputations. Exchanges implementing KYC can quickly take action to freeze or close accounts that may be linked to criminal activity.
Reduced risk of scams and money laundering
Are there any crypto exchanges without KYC?
Yes, Some people believe that mandating KYC goes against the decentralized nature of cryptocurrency.
Reasons why some may want to avoid KYC.
For example, if someone owes money to creditors, providing their personal information to a cryptocurrency exchange increases their risk of having their assets seized.
Some people simply value their privacy and don’t want to share their information with anyone, for any reason whatsoever.
Can you buy crypto without KYC?
Yes, there are several ways to buy crypto without KYC. For example, you can use peer-to-peer exchanges best known in your locals or use Decentralized exchanges because they don’t require personal information from users.
Let’s not forget that the KYC process has its drawbacks. For example, it can be time-consuming and frustrating for users.
Also there’s always the risk that hackers will steal user information from exchanges.
Now The Big question:-
DO YOU SEE KYC IN CRYPTO AS OPPOSITE OF DECENTRALIZED NATURE OF CRYPTO AND ITS TRANSACTION??