Know Your Customer

Know your customer or (KYC) is a regulatory requirement where a provider of a financial services provider or bank must collect personally identifiable information about its customers in order to mitigate fraud or assist with law enforcement activity.

Some crypto exchanges require KYC when onboarding customers to trade cryptoasset. Unregulated exchanges allow customers to trade without going through this process.

KYC is used to assign an identity to a crypto wallet account and is used by law enforcement to track the provenance of crypto assets associated with illicit-financing.

See also money-laundering, aml, illicit-financing and regulatory-arbitrage.

References

  1. Petro, Louis W., James P. Martin, Adam A. Wadecki, and Harry Cendrowski. The handbook of fraud deterrence. John Wiley & Sons, 2007.
  2. Rae, Shaela W, and Lorraine Mastersmith. 2019. ‘Crypto Asset Trading in Canada: Entering a New Era of Regulation’. Banking & Finance Law Review 35 (1): 153–85.
  3. Papadopoulos, Georgios. 2015. ‘Currency and the Collective Representations of Authority, Nationality, and Value’. Journal of Cultural Economy 8 (4): 521–34. https://doi.org/10.1080/17530350.2014.989884.
  4. Renieris, Elizabeth M. n.d. ‘Why a Little-Known Blockchain-Based Identity Project in Ethiopia Should Concern Us All’. Centre for International Governance Innovation. Accessed 22 February 2022. https://www.cigionline.org/articles/why-a-little-known-blockchain-based-identity-project-in-ethiopia-should-concern-us-all/.
  5. Cumming, Douglas J., Sofia Johan, and Anshum Pant. 2019. ‘Regulation of the Crypto-Economy: Managing Risks, Challenges, and Regulatory Uncertainty’. Journal of Risk and Financial Management 12 (3): 126. https://doi.org/10.3390/jrfm12030126.
  6. Ivaniuk, Viktoria. 2020. ‘Cryptocurrency Exchange Regulation – An International Review’. Magda Dziembowska, Robert Dziembowski, Apelacja w Postępowaniu, 67.
  7. Johnson, Kristin N. 2021. ‘Decentralized Finance: Regulating Cryptocurrency Exchanges’. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3831439.
  8. White, Molly. 2022. ‘Cryptocurrency Off-Ramps, and the Shift towards Centralization’. Molly White. 12 February 2022. https://blog.mollywhite.net/off-ramps/.
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