Cryptocurrencies, why KYC when it's my money?

The heading for this article is exactly the question most people ask when doing business online involving cryptocurrencies exchanges and in most crypto incentivized platforms. Most people have abandoned their money on some platforms due to KYC matter. As a regular online user, I have experienced several cases where I was required to do a KYC before getting access to my benefits on such platforms. Initially l use to feel insecure about it, but gradually I came to understand that KYC is done for the user's benefits. I have done it on a number of platforms since then. Some time ago I wrote about a new crypto incentives platform called Centify, a lot of people signed up for the site through the referral link on the article. But most couldn't claim their benefits due to the KYC hurdle, I did mine and made a good amount of money on that platform. So what is KYC, and why should we do it?

What is KYC?

KYC is something we can not escape in the world of finance and banking operations whether we like it or not. For those who do not know, KYC means Know Your Customer. It is a mandatory process for identifying and verifying customers all over the world. It is a law backed procedure to provide legal and transparent financial products and services. Hence every legal and genuine financial platform made it a basic requirement to access their products and services.

Why Introduce KYC?

The aim of KYC is not to discourage the customer with bureaucracy and paperwork, but to prevent identity theft, money laundering, terrorist financing, and financial fraud. A KYC check allows a financial platform or company to better know their customer and manage risks accordingly. If you understand the issue of identity thief you will understand why KYC is important. Everyone who operates a bank account must do a KYC exercise before using their services. And you know the reasons why you are made to do it. Banks have even gone as far as requiring biometric data from their customers as means of identification which is also part of KYC. What the bank does is not different from what we are asked to do in online platforms, and the purpose is the same protecting customers from identity theft and financial laundering.

In some platforms, KYC is done to prove that you are human and not a bot and to detect multiple accounts holders. Most people like to take advantage of platforms that give free cryptocurrencies, one of the ways to detect multiplicity of accounts is through KYC. With KYC ghost accounts are quickly identified and dealt with.

KYC and Cryptocurrencies Exchanges

The idea of using KYC registration in most cryptocurrencies exchanges negates one of the main principles of cryptocurrencies "anonymity". But if we look at it clearly, you will see that anonymity can become a dangerous weapon in the wrong hands.

In truth, the KYC process for crypto exchanges and banks is the same. Both always requires proof of identity (POI) and proof of address (POA), with any other relevant information for verification. However, there may be differences in the actual process.

Cryptocurrency exchanges can accept different types of IDs, ask to upload different documents, using different procedures overall.

Common document needed for KYC

Two types of documents are mostly required, these are proof of identity and proof of address.

Proof of identity includes the following documents which are generally accepted as proof of identity:

• Passport photograph

• Driver's license;

• Voter’s Card

About proof of address, the documents that are required for submission are as follows:

• Utility bill, e.g., telephone bill, electricity bill, gas bill.

• Bank account statement with signature verification.

• Permanent resident address, which includes your country and state.

Given the explanation above, I don't see any reason why people should still be afraid of undergoing a KYC exercise when needed to be able to do business in most cryptocurrencies exchanges and platforms.