Regulators have introduced KYC norms for crypto trading
Blockchain technology, the foundation of the cryptocurrency industry, is being seen as a fascinating development that brings transparency in currency transactions. Despite some volatility, the crypto industry has seen overall gains over the past two years. And, financial experts believe it will remain a sunrise industry for the foreseeable future. More and more investors are entering this industry. This continued increase is not without attracting the attention of regulators and policymakers worldwide. Since this is a new industry, they closely watch how it works and matures.
Regulators have put in place a number of measures to reduce risks to the gradual development of the industry and ensure no sudden collisions. One of these measures is called KYC.
What is it?
KYC stands for “Know Your Customer”. It refers to a financial institution’s obligation to verify the identity and background check of its customers before allowing them to use its product or platform. This is part of a series of measures aimed at combating money laundering. Simply put, it stops the bad guys from hiding the source of their nefarious money.
To comply with the KYC process, financial institutions can ask their clients for information about their investment knowledge, risk tolerance, personal details, and financial situation. For crypto investments, that usually means asking for PAN details and proof of address – such as a passport or driver’s license or Aadhaar.
Your bank or exchange may ask you to verify your identity multiple times, depending on their requirements.
Is it possible to trade without KYC?
Yes, not all exchanges are required to complete the KYC process first in order to be able to trade. But they are becoming increasingly rare. And there is nothing wrong with your KYC request being made for free trading. It can help you resolve complaints or resolve complaints later.
KYC and Cryptocurrency Exchange
As a decentralized platform, cryptocurrency trading does not require one to transact business through a bank. As a result, the crypto industry is prone to KYC-related problems. Many decentralized services are designed to allow customers to remain anonymous. This means that many crypto companies are not able to identify their customers – something that regulators are not okay with. So crypto companies are now required to put in place strict KYC measures.
