We suppose everyone has heard about KYC (Know Your Customer) – an identity verification of the crypto platform’s users in accordance with legal requirements and current laws and regulations. However, no one knows precisely whether there are any risks, as well as what to look for while choosing a crypto exchange no KYC. If you’d like to get the answers to all of those questions, you’ve come to the right place – today’s article will tell you everything you need to know about no KYC exchanges. So read carefully, and let’s get started!
What to look for in a no KYC exchange?
Before moving to the main question – what to look for while choosing a no KYC exchange, let’s deal with the following: what does the Know Your Customer procedure include and why is it actually important?
Know Your Customer (KYC) is a customer verification process carried out by a financial institution before providing financial services. This process includes identification of the person, verification of documents, as well as assessment of all the risks of the potential client.
KYC is a financial institution’s obligation to the regulator to keep personal information about all of its customers. Know Your Customer is a tool of international financial policy to combat money laundering and terrorist financing. The process also serves as a protective mechanism to mitigate potential risks for the company itself, and failure to comply with these rules threatens the company with fines from the regulator and even license revocation.
KYC includes the following procedures:
- Identification with the help of required documents, as well as address verification,
- Analysis of the client’s financial condition – confirmation of the income source and mandatory monitoring of transactions,
- Assessment of all risks associated with customer activities, such as money laundering or terrorist financing.
Why is KYC important, you may ask? The main purpose of the technology is to take care of a safe financial environment, prevent money laundering and eliminate terrorist financing risks. Using Know Your Customer, all the financial institutions identify each customer – whether they are who they claim to be and what their history is.
As we’ve already found out, the KYC procedure requires personal data to be provided. Users of crypto exchanges need to accept this as a fact and choose trading platforms that are able to minimize the amount of data collected and guarantee the protection of personal information according to global and European standards.
What to pay attention to when choosing a no KYC Bitcoin exchange:
- The amount of data required,
- The technology of storing and protecting information,
- Responsibilities of the exchange in case of a leak,
- The history of exchange hacks.
Actually, the introduction of the KYC procedure wasn’t firstly welcomed either by users or by cryptocurrency exchanges, which asserted that identification contradicted the nature of blockchain – anonymity. However, Know Your Customer technology helps to deal with all the difficulties that became a big problem in the crypto world in due course – money laundering, the development of illegal markets, cryptocurrency stealing, etc.
Risks of KYC
Now, let’s speak about the risks of Know Your Customer technology.
The identity verification process usually requires the user’s personal information such as name, address, date of birth, a photo with a passport, and scans of documents. What’s the harm in this case?
- The exchange can be hacked, which always leads to a leak of critical information. It means that the third parties can gain access to your personal data and documents (and sell it on the black market in the future).
- Exchanges may transfer your data to government agencies.
- Unscrupulous employees may use your information for their personal purposes.
In addition, verification of personal information can take a long time, so you’ll have to wait until the start of trading. Without verification, you can trade immediately.
So, the disadvantages of such cryptocurrency exchanges are the following:
- There are often higher commissions,
- The exchange may work secretly,
- There might be restrictions on the number of funds for trading activities without identity verification.
A decentralized exchange no KYC, in turn, helps you to avoid all of those difficulties, making any of the required processes much easier and more convenient. Below you can find detailed information about the advantages of crypto exchanging without KYC.
Advantages of crypto exchanging without KYC
Of course, KYC increases trust in cryptocurrencies on both an individual and institutional level. In many cases, the KYC procedure helps avoid financial theft, and the average customer also benefits from this policy. For example, suspicious transactions are suspended and the user gets their coins back after the identification procedure. Anyway, criminals won’t be able to prove their right to the stolen tokens.
Most likely, in the future, there will be even stricter rules for verification on exchanges than KYC, although there are still exchanges without verification. Despite the crypto industry’s far-reaching goal of becoming an alternative to traditional finance, it has to play by the rules set by governments and regulators. The question is the following: will a consensus be found and will the crypto industry be able to maintain its value foundations under such pressure? There’s no guarantee.
Have a question we haven’t covered? If so, take a look at our FAQs list – there you’ll definitely find the answers to all the remaining issues.
Do all crypto exchanges require KYC?
Besides, we’d like to draw your attention to another no KYC exchange – the Droidex aggregator that offers the most affordable rates among its competitors.
Below you’ll be able to take a closer look at the key advantages of the platform:
- The best rates. The Droidex aggregator connects to several major DEXs, including Uniswap, Kyber, Curve, Pancakeswap, and others.
- Gas Optimizations. With Droidex, you’ll have a perfect chance to find the best rate since the aggregator does everything possible for that – it even splits your order across many decentralized exchanges.
- Exchange routing. Droidex is striving to avoid overengineering the route, so its pathing logic accounts for the gas costs of any suggested step.
To get more information, we recommend you to visit the aggregator’s official website – droidex.io.
What is KYC?
We sincerely hope our guide helped you to understand the meaning of KYC better, as well as learn how it’s possible to swap tokens with minimal risks on non KYC crypto exchanges. Even though almost every process is influenced by some risks, there is always an opportunity to avoid all the difficulties by using helpful tips and life hacks – just choose wisely and learn all the necessary information about the platform of your choice in advance. Thank you for reading!