What Is ‘Know Your Customer’ (KYC)?
KYC is an essential and standard process that financial institutions implement and is commonplace amongst major centralised cryptocurrency exchanges. It typically means asking for a customer’s identity document(s) when they sign up for an account in order to verify who they are. Documents can include a passport, driver’s license, or other forms of government identification.
Why Is KYC Important?
KYC is becoming increasingly more important as the cryptocurrency space grows, with financial institutions using it as a means to stop illegal transactions and criminal behaviour. Typically, once the KYC process has started, institutions use the information provided by the applicant to cross-reference with other databases to confirm the individual’s identity. More recently, cryptocurrency companies have received increased pressure to apply the KYC process, as fears have risen that criminals are using their services.