{"id":8432,"date":"2022-07-20T06:13:54","date_gmt":"2022-07-20T00:43:54","guid":{"rendered":"https:\/\/aayushbhaskar.com\/?p=8432"},"modified":"2022-07-20T01:22:05","modified_gmt":"2022-07-19T19:52:05","slug":"kyc-me-kyc-me-not","status":"publish","type":"post","link":"https:\/\/aayushbhaskar.com\/kyc-me-kyc-me-not\/","title":{"rendered":"KYC Me, KYC Me Not","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"

In recent years, the Crypto industry has made giant leaps forward in terms of adoption. This has been made possible due to the Industry’s acceptance of the need to be regulated.<\/p>\n

The compromise, it seems, is that the industry is ready to accept the lower denomination of being digital assets instead of a new monetary system. In return, the Governments have also accepted this interpretation & tried not to overburden the industry with regulation that would be the case if this was a new monetary system.<\/p>\n

A major impact of regulation is the Know Your Customer (KYC) requirement, which has created a fierce divide within the industry.<\/p>\n

On the one hand, are the centralized exchanges (CEXs) who, given the nature of their business, have pushed & now implemented various procedures to encourage verified account holders.<\/p>\n

On the other hand, the decentralized movement continues to feel that accepting regulation is a death sentence to what the industry set out to do.<\/p>\n

The focus of this post is to understand Crypto KYC, the benefits, the drawbacks, and where \/ how you can trade without the KYC requirement. Bear in mind that the content of this article is purely educational and to help you manage your risks<\/strong><\/em>, lest you end up losing money because your \u201cNo KYC CEX\u201d decided to close shop.<\/p>\n

Ready? Let’s go explore KYC Me and KYC Me Not.<\/p>\n

1. What is the KYC Requirement?<\/h2>\n

Simply put, KYC is to Know Your Customer.<\/p>\n

Why?<\/p>\n

Well, if you buy a bagel at your local bakery, the shopkeeper doesn’t need to know who you are.<\/p>\n

But what if you bought a hunting rifle or a bagel instead? Now, it would seem that the shopkeeper does need to know who you are.<\/p>\n

After all, the shopkeeper will not want to sell to an unlicensed person or someone with a history of violence associated with their name.<\/p>\n

The same concept applies to financial services. Money makes the world go round, and literally, that’s true for money earned through illicit means and\/or meant to further criminal activities.<\/p>\n

Hence, it is important for the shopkeeper selling Crypto<\/a> buy & sell to inquire who you are to rule out bad actors.<\/p>\n

1.1 Benefits of KYC<\/h3>\n

Another analogy to help you understand this. The shopkeeper selling bagels doesn’t know you. He sells thousands of bagels a day to hundreds of customers. If someone were to inquire with him about you, he wouldn’t have the first clue.<\/p>\n

On the other hand, if the Police are looking for a suspect that committed a crime with a hunting rifle or made a donation to a banned outfit, your gun shop or your bank will vouch for you respectively.<\/p>\n

In a nutshell, KYC protects you. Sure, the platform through which you transact benefits as well in mitigating the risk of misuse of their platform. However, the biggest beneficiary is you.<\/p>\n

1.2 Drawbacks of KYC<\/h3>\n

From a Crypto perspective, generally, two arguments are made to avoid KYC.<\/p>\n

First, your identity is in the hands of third parties, which may disclose it to others. The second is that your earnings become subject to taxation.<\/p>\n

Allow me to debunk both these arguments as follows:<\/p>\n