KYC Crypto – Digital Procedures To Diminish Crypto Fraud

Juliet D'cruz

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Meta Description: KYC solution protects the crypto market from fraud. It identifies the customers’ identities and filters out the users who are exposed to suspicious activities.


Just like other financial industries, the cryptocurrency industry is also getting under the control of criminal activists who tend to use the crypto space for their welfare. Numerous crypto frauds are circulating globally from which the exchanges and customers tend to face huge financial losses. The fraudsters are easily doing money laundering and turning the illegal money into crypto to fund terrorist organizations. Crypto frauds are hard to trace and thus they increase exponentially with time. Hence, KYC (Know Your Customer) is mandatory for the crypto exchanges, unlike every other financial institution to provide uninterrupted services to the customers.

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KYC In Crypto Space

Know your customer refers to the customers’ identity verification process. The KYC anti-money laundering procedures are becoming mandatory in cryptocurrency exchanges. Cryptocurrency being an anonymous asset is the only reason for getting so much hype but most of the crypto exchanges are applying KYC in their verification process to put off different scams and frauds. With the help of KYC compliance, the exchange would get to know about the customers’ to whom services are to be given. The real identities will be identified and the customers linked with any sort of crime will be filtered out making the crypto space protected from such illicit activities.

Why is KYC Mandatory for Crypto Exchanges?

KYC procedures are set mandatory by the regulators and the crypto exchanges are obliged to implement them in their verification process. Money laundering is a massive problem globally. Cryptocurrency being a digital currency is easy to move around the world and transaction cost is much cheaper than the traditional currency. Due to such reasons, money laundering is increasing which is then used in terror attacks and various other criminal activities. Keeping in mind such a situation, the crypto exchanges and wallets must follow KYC which will verify the customer before onboarding and will also verify the transaction and monitor the pattern of the transaction thus no suspicious transaction will go unchecked.

The Significance  of KYC For Crypto Exchanges

Know your customer is of great significance for the cryptocurrency space. KYC is the gateway by which the money launderers and other fraudsters will be identified and eradicated from the system. KYC is promising to provide the customers a safe and protected crypto space where their investments are kept protected.

  • Makes crypto exchange trustworthy

To get massive customer attention and to reach the top level of adoption the crypto exchanges must develop trust among the customers and must provide the customers an environment where they feel assured to invest or do online transactions. By the adoption of the KYC verification services, the crypto exchanges can build trust among the new customers. With effective KYC checks, the customer will feel secure that their money will not be abducted or will not be scammed.

  • Diminishing the risks of financial fraud

Every business and institution which is dealing with any level of money transaction is exposed to financial fraud. Billion-dollar frauds are happening annually which is alarming. This looted money is then used in various other crimes such as money laundering, child trafficking, illegal drug transfer, terror attacks, and many more. The crypto market is also under the impact of such happening. The money placed in the digital wallets is pretty much hackable and due to the selling of cryptocurrency to illegitimate customers such crimes are more easily done. To put off crimes KYC procedure gives promising results.

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  • Sustain Crypto Market

The crypto market has emerged as a result of the technology boom. It is getting enough customer attention but due to the scams and frauds, the customers are not ready to invest, this situation affects the crypto market’s sustainability. KYC procedures are life saviors and help the crypto market to sustain and stand firm. At the time of registration when the customers know that the system is following proper regulations, the customers will trust the exchange and eventually will do transactions thus with the increasing number of transactions, the market will definitely sustain.

The Role Of Automated KYC To Stop Money Laundering

The old-fashioned KYC procedure was not capable of stopping money laundering. The procedure was done manually and tackling the verification officer was quite easy. Using fake identities and various money laundering techniques hiding the legitimate money from the illegitimate was easily done. Thus with the embeddedness of the technology with the old-fashioned KYC money laundering procedures, it made it pretty much hard for the criminal to run money laundering activities. The illegitimate customers which tend to be involved in illicit activities are identified and reported to the authorities.

Final Thoughts

Cryptocurrency is the future of currency. Crypto exchanges and wallets are in need of modern solutions powered by technology to stand firm to fight the war against fraudsters. KYC Crypto verification procedure is the hour of need and must be adopted by the crypto exchanges and businesses in order to gain the trust of the customers and provide them a safe crypto space.