What is Know Your Customer?
Regulatory requirements that force financial services to verify their customers' identities, creating data collection obligations that conflict with financial privacy.
Also known as: KYC
KYC regulations are the primary barrier to financial privacy, requiring identity verification for most financial services.
What's Required
- Government-issued photo ID
- Proof of address
- Sometimes: selfie, video verification, source of funds declaration
- Ongoing monitoring of transactions
Privacy Impact
- Creates centralized databases of financial identities (breach targets)
- Links all financial activity to verified identity
- Data shared with government agencies on request
- KYC data from exchanges has been leaked in breaches (Ledger, Gemini)
Avoiding KYC
- Privacy coins (Monero, DERO): Private by default
- DEXs: Trade without accounts or identity
- Peer-to-peer: Bisq, LocalMonero (now closed), HodlHodl
- ATMs: Some Bitcoin ATMs have low or no KYC for small amounts
KYCnot.me
A directory of services that don't require KYC. Default Privacy tracks the KYC status of tools in its privacy tools directory.
Related Terms
Atomic Swap
A peer-to-peer exchange of one cryptocurrency for another without using a centralized exchange, preserving privacy by avoiding KYC requirements.
Decentralized Exchange
A cryptocurrency exchange that operates without a central authority, allowing peer-to-peer trading without KYC requirements or custodial risk.
Privacy Coin
A cryptocurrency designed with built-in privacy features that hide transaction amounts, sender and receiver addresses, or both.
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