KYC stands for Know Your Customer. It refers to a set of government regulations designed to make criminal activity harder by requiring that companies (such as an exchangeAn exchange is a platform that enables you to exchange one currency for another currency. It is a place where people can... Click for full definition) verify the personal identity of their customers.
When you deal with any regulated exchange (especially here in the United States), you will need to comply with KYC. This usually means verifying your identity by way of sending in photos of your driver’s license along with your mug shot. 🙂 They verify that (usually automatically) to ensure you are who you are you are.
Some hardcore crypto enthusiasts really take offense to KYC rules. They cling to the idea that the original idea of crypto was to enable anonymous, private, peer-to-peer transactions. And that’s fine. 🙂 When it comes to crypto, there are always ways to execute private transactions. But, in the real world, if you want some degree of security and confidence in crypto trading and you want the market value to really go up because of mainstream adoption, then KYC rules are not to be feared. Simply put, some common sense regulation in crypto is necessary.
If you want to avoid KYC, you have 2 options:
- Use a centralized, but UNregulated exchange. Do so at your own risk.
- Use a decentralized exchange.