What is KYC?

1. Abstract

2. Overview of KYC

• If you have an account with a financial service or cryptocurrency exchange, it is recommended that you complete your KYC, which requires financial service providers to collect and verify their customers' identity information. KYC policies help combat money laundering, terrorist financing, fraud, and the illegal transfer of funds.

• KYC is usually performed proactively. Most financial service providers advise their customers to perform KYC during the new user creation process before conducting financial transactions. In some cases, it is possible to create an account without KYC, but functionality will often be limited.

• When performing KYC, you may be asked to provide the following information: ID card, driver's license, passport, etc.

3. KYC Compliance

4. Completing KYC for Cryptocurrency Transactions is Recommended

1. Blockchain transactions are irreversible. If you make a mistake, there is no administrator who can help. If funds are stolen or transferred, they cannot be retrieved.
2. Cryptocurrency is anonymous. You can create a crypto wallet without submitting any personal details.
3. In many countries, the regulation, legality, and taxation of cryptocurrency remains uncertain.

5. Advantages of KYC

1. Lenders have an easier time assessing their risk through the customer's identity and financial history. This process allows more responsible lending and risk management.
2. Identity theft and other types of financial fraud are less possible after KYC verification.
3. As a proactive measure, KYC significantly reduces the risk of money laundering occurring.
4. KYC verification improves public trust, security, and accountability in financial service providers. This trust can help bring about a positive impact on the financial industry as a whole and further encourage investment.

6. KYC & Decentralization

• Decentralization has been the focus of cryptocurrency from the beginning. As mentioned above, anyone can create wallets and hold cryptocurrency without having to provide personal details about themselves. This, in turn, allows unscrupulous individuals to use cryptocurrency for money laundering purposes.

• Exchanges are often required by governments and regulators to complete KYC verification of their customers. Since mandatory KYC is difficult to implement for crypto wallets, services that convert Fiat into cryptocurrency are more suitable for KYC implementation.

7. Arguments against KYC

1. Performing KYC incurs additional costs, which are usually passed on to the customer as fees.
2. Some users do not have the required documentation for KYC, or may not have a permanent address. This makes it difficult for them to access certain financial services.
3. Irresponsible exchanges may lack appropriate security, putting personal information at risk for theft.
4. Detractors argue that KYC verification goes against the decentralized ideal of cryptocurrency.

8. Conclusion