KYC (know your customer)
The checks a financial company runs to confirm who you are before it serves you, such as your name, your address and an identity document. Exchanges run them before you can buy crypto or turn it back into money in your bank.
Rules against money laundering require banks, exchanges and other companies that move money for others to know who their customers are, and to keep records. In the United States, FinCEN’s rules require businesses that move crypto for others to verify their customers’ identity. In practice, opening an account at an exchange usually means handing over your name, your address, your contact details and a picture of an identity document.
The checks follow the money too. In the European Union, since December 2024, crypto companies have had to record who is on each side of every transfer, whatever the amount. When the other side is a wallet that no company holds, they ask their customer, and above 1,000 EUR they also have to check whether that wallet is their customer’s own.
Why it matters
- You need it to get money in and out. In the European Union, an exchange has to find out who sent a payment from such a wallet before it lets you use the money. Get verified before you need it.
- Your documents stay in the company’s files, and files leak. In May 2025, a large US exchange told the SEC that criminals had obtained customer records, among them names, addresses and images of passports and driver’s licenses, and had demanded money not to publish them. It estimated the cost at 180 million to 400 million dollars.
- A wallet you control runs no identity checks, as Italy’s central bank notes, but money moving between it and an exchange brings the exchange’s questions with it.
The guides on getting paid from abroad in digital dollars and on custodial or self-custody go further. See also self-custody.