KYC and Cryptocurrency

If you’ve been involved in cryptocurrency for more than a few months, you probably already have an opinion on KYC/AML documentation. While 2017 saw a huge proliferation of exchanges and services more or less free of burdensome restrictions and regulations, in 2018 regulators worldwide have begun to catch up to this new market. Now, KYC is mandatory in countries like the U.S. and U.K., and many more countries are looking to follow them. Tellingly, the United States has just announced that it doesn’t consider itself bound by national borders in pursuing unregulated services, a statement which should cause fear among unregulated operators.

The roll-out of the (admittedly intrusive) KYC documentation has caused complaints from many users who previously were not required to submit such detailed information. These complaints are usually directed at the services and platforms, and typically centre on how such regulation goes against the goals of cryptocurrency. While it’s natural to be frustrated with an added inconvenience, KYC is here to stay, and that’s not down to the exchanges. Furthermore, the advent of a stricter set of financial regulations on the market is, we believe, a positive step towards global acceptance of this promising new technology.

What is KYC/AML?

Know Your Customer (KYC) documentation is the process of obtaining identifying information about the clients of a service. To comply with this, clients are asked to submit up-to-date proof of eligibility to use the service. In the UK, this proof may include:

  • Personal Identification Documents (Passport, drivers liscence, and some government issued ID’s)
  • Address Verification (Proof of Address in the form of a recent bill or other official communication)
  • Contact Verification (E-mail confirmation)
  • Financial Verification (Confirmation that you are currently or are eligible to be a customer of a UK banking institution)

It is, for the most part, just to verify a customer is eligible to use a financial service in that particular jurisdiction. Some examples of ineligible clients include minors, undocumented workers, or individuals with particular criminal histories. It can also provide information under examination by law enforcement in case of future illegal actions.

AML (Anti-Money Laundering) requirements essentially refer to a raft of regulations enacted to prevent the conversion of illicitly obtained and undeclared money into legitimate assets (or money laundering, as everyone else knows it). Specifically, the regulations place the responsibility squarely on the government and financial institutions to create this regulatory framework to prevent criminal activity occurring in their domain.

Cryptocurrency Regulation

KYC and AML requirements represent significant efforts being made to regulate the cryptocurrency industry. Due to its disruptive and incredibly rapid rise to a several hundred billion dollar market, financial regulators understandably feel the need to closely monitor the space. The U.S., U.K., E.U., and South Korea have all made KYC/AML a required component of all crypto regulation, and dozens of other countries are making similar moves.

As mentioned earlier, traditionalists often say that KYC is antithetical to the goals of cryptocurrency (i.e. unregulated, anonymous, and borderless). While the introduction of such documentation may not be the ideal that many saw in cryptocurrency’s early years, it may quite possibly be the only way we will see adoption on a large scale. For the industry and exchanges to resist regulation would not only lose us international recognition and support but would also make the entire industry a legitimate target for governments and financial institutions.

Although many studies have shown that criminal usage of cryptocurrencies is a far lower percentage than many critics have claimed, it is still estimated that billions of dollars are laundered using cryptocurrency every year, not to mention the blatant market manipulation and insider trading that runs rampant in the industry. On the other hand, it is also true that the vast majority of cryptocurrency users are completely above board. This is our chance, as a community, to show the world that cryptocurrency is not only here to stay, but that this is a good thing.


At XCH4NGE, we face a high regulatory bar due to our status as a fiat on-ramp service. While somewhat intrusive, this policy will also provide our users several benefits. By partnering with Experian for our KYC, we ensure that every user on our platform is verified as genuine. Not only does this help stop dark money from entering our ecosystem, it also allows us to prevent the sort of fraud that proliferates on many existing peer-to-peer services.

Looking ahead, this will allow us to engage proactively with the banking industry and forge partnerships to bring our users all the advantages of cryptocurrency. When it comes to keeping your data safe, we adhere to the highest standards of data protection and network security to ensure that your private information stays private. As you are verified during sign-up, there is no need for trust in any other user, and your username is the only identifying factor other users can see.

The cryptocurrency market is by definition a trustless one, and we understand that there are no shortage of shady platforms and service providers. As crypto becomes more and more mainstream, however, there is a real need for reformation. The team at XCH4NGE understands that as a representative of the crypto industry, we must be the change we wish to see.

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