You must have heard the term KYC even before you stepped into the crypto world. KYC, which means know your customer is the process of identification mainly used in financial sectors to verify the true identity of their customers. Of course, it is really important to have the correct identity of customers for security purposes.
Let’s take the exam of banks. All banks ask you to go through know your customer process but why? What’s the reason behind it? Every bank has certain limitations for example how much cash you can withdraw, how many banks accounts you can have and then how much tax you need to pay, what is the source of your income and everything. If they wouldn’t verify their customers and KYC, customers can exploit their services and use it for wrong purposes, access black money easily without any fear of getting caught. You see, KYC has so much importance, especially in the financial sector.
But now the question is Why KYC in the crypto sector? Wasn’t cryptocurrency all about being anonymous and not sharing your details with any third party? In this article, we are going to tell you about the importance of KYC in the crypto sector. Go through the article and find out why it is necessary even more in crypto.
So, What Is KYC exactly?
Know your customer (KYC) is the verification process used in many organizations to confirm the true identities of their customers. Many organizations require you to do KYC before letting you access their services that include Banks and financial institutions, foreign institutions, government bodies, as well as many public and private sector organizations. Many organizations even let you use services without KYC but with limitations.
The know your customer process requires you to provide your personal information like full name, date of birth, email address, phone number. Then you need to submit your documents that include any of your govt ID proof like Driving license or passport. The same is with crypto exchanges and platforms. You need to confirm your identity by providing all these details and believe us it’s only for you good. Don’t believe us, see for yourself by reading the Importance of KYC In Crypto given below.
Importance Of KYC In Crypto Sector
Whether you like it or not, crypto platforms are going to be more and more regulated with time. That means you would have to go through painful long verification procedures and share your information. You might wonder what’s the whole point of cryptocurrency decentralization when at the end you are sharing your information but it has its benefits. This will not only secure the crypto platforms but also the users from hackers and other people who tend to steal your funds and flew away without getting caught.
- KYC would reduce bribery, fraud, money laundering, terrorism and identity theft in the crypto sector.
- You would get to access all the features of exchanges and other crypto platforms without any limitations.
- As the industry is advancing, the time taken in KYC verification is also getting shorter. You can already find many crypto exchanges that verifies your identity within a few hours so that you can start without much delay.
These the major benefits of know your customer verification in cryptocurrency. However, you should only use reputable exchanges and crypto platforms and just not provide your details to anyone for safety purposes. Your information is kept private and not shared among other platforms which also means that you need to verify KYC for each crypto platform you use. All these is to filter out only those individuals who actually don’t have any genuine interest in cryptocurrency but only looking to launder their capitals.
Requirement Of KYC In Crypto Exchanges
At the moment, almost all reputable exchanges require you to go through KYC verification especially those offering fiat to crypto services. Some of the exchanges that have KYC regulations mandatory are Coinbse, Kraken and CEX.io, however, others like Binance have it optional. But you still won’t have access to complete features and services without KYC. The benefits verified customers have over unverified customers are that they can deposit and withdraw higher amounts. Moreover, it would be easy for the verified customer to get help from the exchange in case of fraud and security breaches as they would be able to prove their identity.
Is It Safe to Provide Your Information To Crypto Platforms?
It basically depends on the platform you are using. If you are using a reputable exchange or platform, then it’s completely okay to provide them with your information. But at the same time, you should be aware of fake and shady sites. You must check out if the platform has secured protocols like https as well as they follow certain security measure to keep your data safe and does not share it with anyone.
What Details & Documents You Need To Provide For KYC?
Now that you know about the importance of KYC in cryptocurrency, let’s learn about the details you need to provide to them. You need to provide your basic details and documents to get verified on crypto platforms. Most of the exchanges as you for the following information:
Phone Number and Email ID
The first things you would need to verify are your phone number and email ID. They’ll send you a code on your provided number and email which you need to enter on the website. This will also help you recover your account password if ever lost and in two-factor authentication.
You can use your Driving licence, passport, Voter’s identity card, electricity bills, water bills, bank statements as a proof of address. Makes sure the bills and bank statement are recent. For more details check the requirements of your exchange particularly.
Again you can use all the above-mentioned government IDs as your identity proof. This includes Passport, Driving Licence, your employee identity card or university identity card.
Some of the exchanges also ask you to provide a picture of you holding your identity card. This is to verify that you are what you claim to be. Just make sure the picture you take is clear and the ID card is visible properly otherwise your ID would get rejected.