Role of KYC in Securing Cryptocurrency trading

Lettering KYC with abstract persona on keyboard.

The world’s largest cryptocurrency exchanges, like other financial institutions, need users to submit to identification verification in order to continue using their services. What distinguishes KYC verification from anti-money laundering legislation, why it is necessary, and how does it assist cryptocurrency traders? Does KYC verification undermine the decentralised nature of publicly traded cryptocurrencies? In this essay, we’ll cover these issues and others.

What is identity verification, or KYC?

“Know your customer” or “know your client” is referred to by the acronym KYC. It alludes to the process through which a financial institution usually confirms the identity of a customer. Information that can be used to verify your identification is necessary for identity verification, such as a valid ID card, utility bills with your home address, a passport, etc. Institutional and even regional standards for identification documents differ.

Customers are frequently asked to provide identification verification documents when creating an account and occasionally when their personal information has changed. You will need to update your personal information, for instance, if you legally change your name a few months after setting up your account.

You might not be able to use all the features of a cryptocurrency exchange if you don’t finish the KYC procedure. For instance, Binance enables users to create accounts, use fundamental features, and conduct a small number of transactions without providing KYC information. Customers must finish the KYC verification process in order to acquire full access and increase higher deposit and withdrawal limits.

Why must I successfully complete the KYC process?

That’s simple; it’s a legal obligation that enables us to keep Revolut secure, free of fraudsters, money launderers, and other undesirables.

Consequently, if you wish to use Revolut, one of the first things you’ll need to do is pass the KYC check, which entails sending us the following:

images of your valid national identification card, passport, or driver’s licence (usually front and back)

A clean selfie that isn’t distorted by glare or anything funny (don’t worry, we won’t share it anywhere)

Knowing Why KYC Is Important

The KYC requirements could seem like an extra step that just makes things more difficult when applying for a bank account or starting a finance-based account. But keep in mind that those extra steps have a number of very important functions. Four factors make KYC verification a must for any banking procedure:

Establish customer identity

Verifying a customer’s identity is crucial since it proves that the consumer is who they claim to be. To prevent identity theft and other criminal activity that can threaten clients, this step is essential.

Discover the client’s needs 

KYC can be utilise in investments to comprehend a client’s risk appetite, investment objectives. And demands in order to make knowledgeable recommendations for investment instruments that could expand their financial portfolios.

Know the nature of customers’ activities 

In many use-case scenarios. KYC verification additionally keep an eye on banking transactions to know the nature of customers’ activities. And determine the legitimacy of a person’s or company’s financing sources.

Assess money laundering risks 

One of the most crucial applications of KYC is to safeguard banks against money laundering. And to identify any suspected illicit behavior. That may indicate undervalue companies, dubious funding sources, or even illegal trading.

It is increasingly obvious that banks must move as many processes as possible to online means now. That more than 2.5 billion individuals around the world utilise internet banking. For many years, KYC procedures were carry out manually. But current initiatives in innovation and digitalization have make it possible for banking facilities to integrate identity. And verification procedures into digital platforms. Document verification service is also use for this purpose.

The need for digital innovation aims to decentralize the financial process and make finance operations easier for the end-consumer in an era where people prefer self-service kiosks to banking lines. In order for monitoring bodies to follow and authenticate information without the requirement for physical presence or documents. KYC digitalization is a crucial component of that. Online KYC procedures can be carry out in one of these ways:

Passing scan copies of identification documents. Such as passports, driver’s license, or any other form of government-issued identification. And then cross-referencing the information with that provide in the application constitutes basic online KYC.

Video KYC is a procedure that entails having a video conference call with approved staff members and having an interview to verify their identification.

People can complete a biometric-base KYC verification online by uploading scanned copies of their original documents. And supplying biometric data by having their fingerprints scan.

Not just the financial sector will see an increase in security as these technologies continue to advance. Self-service kiosks for SIM card sales and mobile credit loading are now being develope by telecom operators using KYC verification.

Given that the self-service industry has increased to $28.3 billion. More telecom businesses will probably join the bandwagon in the years to come.


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