Crypto traders wishing to open an account on trusted cryptocurrency exchanges will no doubt have come across the term “KYC” more than once. The term is widely used in the fintech and traditional banking industries and is currently an important element of blockchain technology.
What Does KYC Mean?
KYC means “Know Your Customer”, that is, the creators of the exchange know who is registered on their site. In theory, this should be easy enough but in practice, it is somewhat more complex.
The vast majority of financial regulators or authorities require financial institutions to have a KYC system, but do not specify exactly how best to do this. Many authorities require banks or exchanges to collect a minimum set of documents and personal information.
This data usually includes:
- ID number / Passport number / License
- Country of Residence
- Date of Birth
Depending on the institution, confirmation of this information is often required; for example, a selfie with a passport. Institutions decide for themselves what specific information the client must provide in order to pass the KYC assessment.
Levels of KYC Policy on Crypto Exchanges
Due to different regulations around the world, there are many KYC levels that are adopted and utilised by different crypto exchanges.
- Lack of KYC: Platforms that do not use any KYC procedures will not ask you for identification documents, but may impose severe restrictions or other conditions.
- Basic KYC procedure: This will allow you to carry out minimal transactions on certain exchanges. This type of KYC usually allows the use of bank cards to deposit Fiat into the platform, with the payment provider and platform sharing your information.
- Full KYC procedure: By providing complete documentation and KYC information, you effectively have full access to the cryptocurrency exchange’s functions. Typically, they will ask for a photo ID.
How To Get KYC
Each exchange has a section with a different name (KYC, Verification, etc) but each carries the same meaning — the passage of personal identification. In most cases, this is needed to deposit and withdraw fiat funds. Occasionally, it is used for regular cryptocurrency trading.
Completing your KYC is both simple and straightforward. We will consider the verification procedure using the example of the BitXmi crypto exchange below:
Once you have completed registration, go to your personal account (the entrance to which is in the upper right corner of the main page) to go through KYC.
On the BitXmi platform, the KYC procedure is called ID Verification. Click on the Verification button:
First, choose your country of registration from the list.
In the next window, fill in the following information in English:
- Identity document (passport, driver’s license, additional documents)
- First name
- Last name
- ID number
The next step is to upload a photo:
- Upload the front cover of your ID document
- Upload your ID document personal information page
- Upload your handheld documents and personal signature photos.
Following submission, you will see the status of the Identity and Address Verification process. After successful verification, you will see that your address is “Verified” on the Address Verification section. This completes your KYC verification process on the BitXmi crypto exchange.
Importance of KYC
An important element of KYC is to ensure that users do not commit money laundering or terrorist financing transactions.
The anonymity and lack of central control over the cryptocurrency industry inevitably led to criminals using digital currencies to channel funds illicitly. KYC effectively assists in the fight against terrorist financing as authorities are able to request and access the data of certain users on exchanges.