KYC stands for ‘Know Your Customer.’. If you are going to partake in the cryptocurrency as a money service business (MSB), make sure that you know what ‘Know Your Customer’ is and how to comply with it. In simple words, if you have decided to make a Bitcoin exchange, you must fulfill the requirements of Know Your Customer. Fundamentally, ‘Know Your Customer’ is a process of knowing your customer that is quite significant in business realms. It enables regulators to ensure that crypto exchanges and buying/selling platforms employ the best security measures and practices. It is crucial to discourage illegal transactions while improving the security of users’ wallets and accounts.

‘Know Your Customer’ is a set of specific processes and procedures that a business or firm employs to confirm and verify the identity of their customers and clients.

Generally, KYC subsumes the collection and verification of the customer’s all means of identification. Such as identity cards issued by the government, address, phone numbers, email address, utility bills, bank statements, etc. At times, the list of this personal information can be bothersome for your customers and users. However, for firms and specifically for crypto exchanges, it is crucial to protect themselves from issues like money laundering, corruption, terrorism, and other illegal acts. 

Crypto exchanges must gather personal information from their customers. Besides, customers should comply with KYC requirements. It is to note here that the robustness of KYC processes vary across firms and jurisdictions.

Levels of KYC

There are four fundamental levels of KYC inclusive of CAP (Customer Acceptance Policy), CIP (Customer Identification Program), Continuous Monitoring of transactions, and Risk Management.

• CAP- this requires a company to determine and document the demographics of their customers.
• CIP- this requires a firm to confirm the identity of their potential customers and users.
• Continuous Monitoring- this requires crypto exchanges and crypto buying/selling platforms to monitor transactions. It is to assure that users comply with regulations to avoid suspicious activities.

• Risk Management- another level involves the management of risks in case any issue occurs related to transactions.

KYC Approach of Crypto Exchanges

KYC practices are continually becoming a gold standard for various regulatory bodies. Therefore crypto exchanges looking to thwart issues like money laundering and illegal transactions in the cryptocurrency ecosystem. It attempts to install a level of trust between buyers and sellers. Besides, it assists business owners in building a healthy relationship with their customers. If there is no KYC, sellers will remain in the dark about their clientele who they are. Furthermore, it will leave sellers unable to protect anticipated malicious activities in the cryptocurrency ecosystem. 

How Does Koinal Comply with KYC Requirements?

Koinal complies with KYC requirements throughout its transaction lifecycle. At Koinal, we require our users to adhere to website policies and KYC rules strictly.

In particular, before signing up for Koinal, we require users to provide sufficient information to keep our platform from criminal activities. One of the reasons to employ KYC is because blockchain is open-source and decentralized.

It’s one of the notable things in the crypto industry that KYC is employed by platforms to keep track of users and their transactions.

Final Thoughts

Briefly, KYC serves as a legitimate alternative to fiat money as it helps in preventing financial crimes and other suspicious activities. Since Koinal strictly adheres to the KYC rules, users can have blindfolded trust on our platform.

So now that you have sufficient information about KYC and how it helps platforms like ours, you can decide to invest in cryptocurrencies. Visit our website to choose which cryptocurrency you would like to buy.