A Peep into KYC

Hi friend welcome back to this space. It's good to have you back here. I hope you enjoyed the last topic we discussed about Technical Analysis. Anyway we will be looking at something different today which is KYC.

We will be exploring this topic shortly and I believe it will be beneficial to old and new folks in the crypto space. Just sit back relax and enjoy every bit of this write up. Also do well not to forget to drop your views in the comment section.

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Introduction

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Having sufficient knowledge about who you're dealing with as a business man or woman or even an organization is very important especially when money is involved. We live in a world where people take advantage of people and system simply because their identity is not really known.

When people's identities are open, real and explicit enough it will be quite difficult to conceive thoughts of theft or money laundering. This is simply because they know they can be easily tracked and apprehended.
So in a way it reduces the rate at which people go into this dubious act because the chance of them being caught is high.

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What is KYC

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I will love to define this by giving us the full meaning of the acronym "KYC". It simply means Know-your-customer. Simple right...smiles. I believe with this you can sum up what this whole thing is about but just before you conclude, just tag along as I show you some other aspect of this subject.

KYC is the initial step taken by financial institution to identify and verify the profile of an individual who they want to have financial dealings with. It's a kind of careful scrutiny which they subject a new customer to just to be sure to are not dealing with a dubious fellow.

^Unsplash

This is done by asking the customer to supply vital documents which is recognized by certain authority i.e government. The essence of demanding for such documents or identities is to match it with whatever information the customer would be giving to them in a face-to-face or virtual conversation.

In summary I would like to define it as one of the way to curb the tendency of carrying out money laundering activities by the customer.

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KYC in crypto

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KYC found it way into this space when it was discovered that some dubious players crept in to fault the system with their dubious act. KYC is an established Anti money laundering system on most exchanges, Cex to be precise. You will have to go through this process if you must be allowed to carry out any transaction on the exchange.

I can remember vividly the period I was to open my Binance account, I had to go through this. I was asked to submit some basic and vital information coupled with a government issued identity card to verify my information before I was verified on the platform. I know this is also the same with other exchange platforms except DEX.

I think it will be expedient to mention some of the identity card that are being requested for on some of these exchanges so you can have a glimpse.

• Voters card
• Drivers licence
• Social security number (SSN)
• Passport
• National Identification Number (specifically for Nigerians) etc

^Unsplash

These might vary based on your country location but the idea is, it must be a means of identification issued by government for the sake of authenticity.

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The benefit of KYC in crypto

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• It brings about transparency.

I mean customers identity and profile will be uncovered and it's a win-win for both the platform and the customer. The customer will be trusted and then the customer in turn will trust the platform for taking proactive security measure to secure his account. Remember that it becomes difficult for impersonation.

• Less money Laundering and scam

It become difficult to carry out money laundering activities and scam when proper KYC procedure is carried out. Infact this is one of the core reasons why KYC was introduced to Cex and financial institutions.

• Market Stability

This also has a way of bringing stability to the market. Everyone tries to play safe because there's nothing like absolute anonymity once you have gone through this procedure. Foul plays are checked in the system.

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Can one still transact crypto without going through KYC

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Well It's a big yes, and that is only possible on Dex. I mean decentralized exchange. Dex has nothing to do with KYC, you move in as anonymous and move out as anonymous. The truth is nobody cares to know who you're on Dex. Just do what brought you there and leave. It is completely open to all.

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This will be all for now friends, I have no doubt that you have gotten enough value already from this post, free free to share with me your take on this topic, perhaps, there's is something important you would have loved me to capture, do go ahead and share with me. Thanks for your time. Gracias!

Reference

Reference

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Disclaimer: This post is made as an education and not investment advice. Digital asset prices are subject to change. All forms of crypto investment have a high risk. I am not a financial advisor, before jumping to any conclusions in this matter please do your own research and consult a financial advisor.

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Regards
@lhorgic♥️

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