Cryptocurrency was built around decentralization, but businesses operating in the crypto economy increasingly have to answer a very traditional question: who is the customer? For exchanges, custodial wallets, crypto payment services, lending platforms, and other virtual asset businesses,KYC in cryptohas become a central part of regulatory compliance and fraud prevention. For startups, however, KYC can seem complicated. Requirements vary between jurisdictions, different services face different levels of scrutiny, and identity verification is only one component of the process. Here is what crypto companies need to know. KYC, or Know Your Customer, is the process businesses use to establish and verify a customer's identity and assess associated risks. Although KYC originated in traditional financial services, it has become increasingly important in crypto as regulators apply anti-money laundering (AML) and counter-terrorist financing requirements to virtual asset businesses. A typical crypto KYC process may collect information such as: Collecting this information isn't enough. Businesses also need to verify that the identity exists, determine whether the document is genuine, and establish that the person presenting it is its legitimate holder. KYC can also include sanctions, politically exposed person (PEP), and adverse-media screening. KYC requirements depend heavily on the service and jurisdiction. However, customer verification is common among centralized crypto businesses that control accounts, custody assets, process payments, or facilitate transactions. These can include cryptocurrency exchanges, custodial wallets, fiat on-ramps and off-ramps, crypto brokerages, OTC trading services, lending platforms, payment processors, crypto ATMs, and some token platforms. International standards also play an important role. The Financial Action Task Force (FATF) establishes global AML and counter-terrorist financing recommendations for virtual assets and virtual asset service providers. Individual countries then implement these principles through their own regulatory frameworks. As a result, a startup operating internationally may need to consider several sets of rules rather than a single global KYC standard. A typical KYC process can be divided into four stages. The process usually begins when a customer creates an account and provides identifying information. Instead of requiring users to manually type every field, businesses can extract information from an identity document. This can make onboarding faster while reducing data-entry errors. The exact information required should depend on the company's regulatory obligations and risk model. The next step is determining whether the customer's identity information is legitimate. Document verification software can identify the document type, read its data, and examine security features for signs of manipulation or counterfeiting. Biometric verification can provide another layer. A customer's selfie can be
