What is KYC#
"KYC" stands for "Know Your Customer" and refers to the process of verifying the identity of individuals or companies wishing to conduct business with another party. This process typically involves collecting and verifying personal information such as name, address, date of birth, ID, and social security number.
For example, when you go to a bank to open an account, you need to fill out a lot of detailed personal information, which is "KYC." Or when you open an Alipay or WeChat Pay account, you also need to undergo real-name authentication (provide real name, phone number, and ID number), which is also "KYC." "KYC" is essential for enterprise management, protecting both their own and users' financial security, and meeting regulatory requirements from government agencies.
What is KYC for Cryptocurrencies#
Cryptocurrencies have decentralized characteristics and therefore have a certain level of anonymity, which is somewhat contradictory to KYC. In recent years, there have been frequent incidents of fraud and theft in cryptocurrency transactions, as well as illegal activities such as fundraising, money laundering, and drug trafficking using cryptocurrencies by criminals. Therefore, driven by governments and financial regulatory agencies worldwide, "KYC" has gradually become a mandatory rule for cryptocurrency exchanges.
To prevent money laundering, cryptocurrency exchanges have started using AML/KYC data insights. AML (Anti-Money Laundering) refers to a series of laws and regulations aimed at preventing money laundering activities. By using AML/KYC data insights, cryptocurrency exchanges can identify suspicious activities and prevent money laundering. This is a significant development as it will help increase the credibility of cryptocurrencies and increase their adoption.