As the cryptocurrency market develops and expands, national and international financial regulators are increasing their pressure on companies that provide services for digital assets to adhere to the same regulations as conventional banks. Effective know-your-customer (KYC) procedures help to prevent unauthorized cryptocurrency use even though there is an ongoing discussion about how to strike the right balance between privacy and security. It’s best to know bybit kyc to trade cryptocurrency in Bybit.

What is KYC?

The term “KYC” (for “know your customer”) refers to a financial institution’s duty to conduct specific identity and background checks on its clients before enabling them to use its product or platform. It is a component of a larger package of tools that regulators around the globe employ to combat money laundering. In other words, it prevents criminals from disguising the source of their funding as legitimate financial activity. Know bybit kyc to open to investing in cryptocurrency.

What does “KYC” in cryptocurrency mean?

The first step in the anti-money laundering (AML) due diligence process is KYC. When a financial institution (FI) onboard a new customer, KYC procedures get conducted to identify and confirm the customer’s identification. Through these procedures, financial institutions can determine the customer risk profile based on their propensity for financial crime.

 

They must incorporate KYC procedures into their AML programs now that bitcoin exchanges and wallet providers get governed like financial institutions.

 

KYC benefits for cryptocurrencies

KYC promotes client trust and transparency.

User identity verification can increase transparency and foster customer confidence. Customer retention is higher if they feel confident that your bitcoin exchange is taking proactive and preventative steps to safeguard their accounts.

 

KYC lessens the likelihood of financial crime.

The amount of cryptocurrency fraud has increased since 2016. According to Forbes, there may have been 80,000 instances of bitcoin fraud in the US alone in 2020. Compared to the same number in 2016, this is a 24000% increase. According to an additional study, illegal cryptocurrency trades reached almost $14 billion in 2021, up from $7.8 billion in 2020. It is a 79% increase.

 

It demonstrates why authorities are eager for bitcoin exchanges to implement thorough KYC and identity verification procedures. Crypto exchanges can improve their market image and decrease fraud with these steps, lowering the possibility that financial crime will occur.

 

Strong KYC policies guarantee future compliance for businesses.

Many exchanges have had difficulty adopting these standards since the legal requirements for KYC compliance are changing and developing. As a result, bitcoin exchanges with Strong KYC rules are in a superior position. As a result, these cryptocurrency exchanges are free to concentrate on increasing conversion rates and expediting transactions rather than trying to catch up.

 

These businesses must ensure that they abide by constantly changing international regulations. But they can lessen their risk of legal troubles or regulatory repercussions by proving their KYC credentials.

 

KYC helps to keep cryptocurrency exchanges stable.

The cryptocurrency market is notorious for its turbulence. However, some of this turbulence gets brought on by unlawful transactions conducted in secret. Market stability will increase if cryptocurrency exchanges adopt KYC and customer verification procedures. It will raise the market’s value and draw more consumers to the area.