If you’ve tried to use a big named crypto exchange you’ve likely encountered the world of KYC Crypto. But why does KYC even exist? Why are they asking for so much private information and can you buy crypto without KYC? Thankfully the answer is yes. In fact, it’s quicker, safer, more private and cheaper than using KYC crypto exchanges.
Contents
What Is KYC Crypto?
KYC stands for “Know Your Customer” and is a part of the broader AML (Anti Money Laundering) regulations enforced by the Financial Industry Regulation Authority (FINRA). It requires financial institutions such as banks or crypto exchanges that hold user funds to verify your identity before you use its products or platform.
We strongly recommend you never use exchanges that require KYC as it’s a serious security and privacy risk whilst also being slower and more expensive.
Top No KYC Crypto Exchanges:
What Does KYC Mean In Crypto?
From its beginning, Satoshi Nakamoto designed Bitcoin to remove all trusted third parties and be exclusively peer-to-peer. A digital version of exchanging a $20 bill in person if you will.
As a result, there is no practical way to enforce things like identity verification as governments, companies or other institutions are completely left out of the process. It’s permissionless. That is, until exchanges started to take custody of users funds.
These companies hold users crypto, conduct transactions on their behalf and provide other financial services such as trading, loans or derivatives. These companies thus need to comply with regulations just like a bank would and so they put all their customers through extensive KYC verification processes.
They want to know your name, address, drivers license, photo and more in order to link your identify to the financial transactions you’re doing. Quite often they’ll request a government issued ID, a selfie or other forms of identification.
KYC Wallet
A wallet is different to an exchange, but can still require you to complete KYC verification if it’s a custodial wallet. As the third party company is the one holding your funds on your behalf, they are required to comply with the AML/KYC laws. While not specifically stated in the Bitcoin Whitepaper, the general ethos of Bitcoin is that you should always have custody of your bitcoins and hold your own private keys.
Learn More: What Is A Bitcoin Wallet?
Why Does KYC Exist?
KYC and AML requirements stem from the Bank Secrecy Act and have generally good intentions.
The purpose of the AML rules is to help detect and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.
FINRA
No one wants money launders, terrorists or other criminals to continue committing crimes so it’s not surprising to see politicians and law enforcement request higher levels of security to prevent it. The trouble is, everything has consequences and we take the side that the good KYC does is far outweighed by the huge damages it causes.
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Consequences Of KYC
Once you give a KYC exchange your private information and get “verified”, they then link whatever bitcoin you buy to that identity. Forever. This also allows the exchange, the government, third parties and Chain Analysis firms to…
- Track what your balance is
- Track what you spend your money on
- Track what taxes you should be paying
- Sell all this information
AML/KYC laws also result in vast honey pots of extremely private and valuable data on hundreds of millions of citizens all being located in one spot. These treasure troves of data get hacked with the customers ultimately being the ones that suffer.
KYC also denies critical financial services like having a bank account to billions of people world wide. That’s because they simply don’t have identification documents like a government issued ID to identify themselves. As such, forcing all financial services to require KYC by default denies access to these people both abroad and even in the USA. In Egypt, for example, 74% of them don’t have a bank account. In Nigeria it’s 55%, in Indonesia it’s 50%, and in India it’s 23%
87% of our planet’s population are born into autocracy or untrustworthy currencies. 4.3 billion people live under authoritarianism
Alex Gladstein
KYC also allows authoritarian rulers to track and punish people by cutting them off from the financial system. We saw this behavior in more democratic countries like Canada recently too. Many women are also cut off simply because where they live deems it illegal for them to own any assets.
KYC also imposes huge costs which are then passed onto the customers to pay. This cost also sets a minimum viable transaction amount, making micro payments impossible.
Incorrect Claims Regarding Crypto KYC
To try and justify these huge consequences, those that encourage and support KYC verification often make incorrect claims. Let’s look at a few.
Crypto “Needs” KYC
Bitcoin doesn’t need KYC. This is because Bitcoin was built to remove any and all trusted third parties. You can download a piece of software, install it and send your bitcoins to another person on the other side of the world without telling a sole, let alone “verifying” your ID.
Buying Without KYC Is More Complicated
It is still possible for customers to purchase crypto without going through a crypto KYC process. However, these methods are far more complicated
Veriff
This is just demonstrably false. Completing KYC verification which involves sending private information to a third party is clearly always going to be more complicated than not having to do it. Non-KYC exchanges allow you to start trading immediately as you don’t need to identify yourself to anyone.
Buying Without KYC Is Riskier
No KYC Crypto Exchanges are in fact safer than KYC exchanges because there is no risk of you losing your funds if they go bankrupt or shutdown. Hundreds of millions have Lost Bitcoin due to Crypto Exchange Bankruptcies. There is also no risk of your private and personal information being leaked as it’s never given in the first place.
Buying Without KYC Is More Expensive
Once again this is just false. You can buy bitcoins using AgoraDesk, which requires no KYC verification, and pay 0% in buying fees. As for the Transaction Fees, non KYC exchange such as Bisq allow you to specify any transaction fee you want.
KYC Reduces Risk Of Scams
Collecting massive databases of intensely private customer information actually increases the risk of scams as these databases almost always get hacked and leaked to the very criminals and scammers they purport to fight. This hugely increases not just the number of scams, but the effectiveness of them as now they can personally target the messages to you.
What To Do If You Own KYC Crypto
The only way to be absolutely sure that the KYC bitcoins you’ve bought can never be linked back to your identity is to sell them on the exchange you bought them from. Once sold, go and re-buy other bitcoins on a non-KYC exchange like AgoraDesk. This may cause tax issues if you’ve made capital gains on your investments, so make sure you consult a financial advisor before doing this.
FAQ
Can I Buy Crypto Without KYC?
Yes! It’s easier, faster, safer and more private to buy Bitcoin without completing KYC verification. You don’t have to create accounts or sign up to any provider, you can start trading straight away and your personal safety and information is never at risk because your identity is never known.
Why Avoid KYC Crypto?
Besides being completely unnecessary, using non-KYC exchanges helps protect your personal safety and private information from scammers and marketing companies. It’s also cheaper, safer and faster too.
Should I Do A KYC For Crypto?
No. There is no need to use KYC exchanges as there are many excellent cheaper, faster and more private and secure non-KYC exchanges. Check out our list of reviewed Crypto Exchanges to find the one that works best for you.
Is Crypto KYC Safe?
While many companies that require KYC to trade are legitimate, safe companies there have also been hundreds of others that have lost or stolen billions in user funds. KYC exchanges also put your data and safety at risk to hackers and scammers, not to mention marketing companies.
What Does KYC Stand For In Crypto?
KYC stands for “Know Your Customer” and is a part of the broader AML (Anti Money Laundering) regulations enforced by the Financial Industry Regulation Authority (FINRA).
