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KYC stands for “Know Your Customer”. In the context of cryptocurrencies, KYC is a process that centralized exchanges (CEXs) use to verify the identity of their customers as a requirement to open an account for trading. In contrast, decentralized crypto exchanges (DEXs) never ask for personal data from their users.

KYC typically involves the collection of private data, such as a government-issued ID, passport or driver’s license, and other identifying information, such as proof of address.

The theoretical purpose of KYC in financial markets (including crypto markets) is to prevent illegal activities such as money laundering, terrorist financing and fraud.