What is KYC in crypto?
DefinitionKYC (Know Your Customer) is the process a financial service uses to verify who its customers are, usually by checking an ID document, a selfie and sometimes proof of address. In crypto, exchanges and P2P platforms run KYC; a self-custody wallet doesn’t need it.
Why crypto services ask for KYC
KYC is part of anti-money-laundering (AML) rules. Regulated businesses that exchange crypto for money must know who they deal with, watch for suspicious activity and, in many countries, report certain information to the authorities.
KYC also helps fight fraud, such as stolen bank accounts being used to buy crypto. On P2P platforms it means both sides pay from, and get paid to, accounts in their own names.
What a KYC check usually asks for
Requirements vary by country and by service, and limits often rise in tiers as you verify more. Verify only inside the official app or website, and never send ID photos to someone who contacts you claiming to be support.
- A government ID, such as a national ID card or passport
- A selfie or short video to match your face to the ID
- Your full name and date of birth, sometimes your address
- For higher limits, proof of address or of the source of your funds
Which crypto activities need KYC
Creating and using a self-custody wallet involves no KYC: the wallet is software on your phone, and the blockchain doesn’t know your name. KYC appears where crypto meets the banking system.
- Self-custody wallet: no KYC
- Centralized exchange: KYC in almost every regulated market
- P2P platform: usually, because bank money moves
- Decentralized exchange: the smart contracts don’t check identity
KYC in Waletifi
You don’t sign up with a phone number, email or name to create a Waletifi wallet, send or receive. P2P trading with local currency does need identity verification with a national ID or passport, because bank money moves and the bank account you use must be in your own name.
