KYC (Know Your Customer)
The identity checks exchanges run before letting you trade, deposit or withdraw.
The identity checks exchanges run before letting you trade, deposit or withdraw.
KYC is the identity layer of a regulated venue: government ID, a selfie or liveness check, proof of address, and sometimes source-of-funds questions. Exchanges run it because money-laundering rules make anonymous accounts a licensing risk, and they size the checks to what you do - small withdrawals may pass on email alone, while large fiat moves trigger enhanced review. The trade-off is direct: the more verification a platform demands, the more likely it is to answer to a regulator and the less likely you are to be frozen out mid-withdrawal.
Verification tiers matter more than the badge on the homepage. Tier 1 often allows trading with tight daily withdrawal caps; each tier raises limits but expands what data the venue holds. Unverified balances can be locked exactly when you want them out, and offshore exchanges that skip KYC recover the trust gap with withdrawal delays or support silence instead. Check the tier table, not just the fee table, before you fund an account.
Worked example
A venue's tier 1 allows $2,000 of daily withdrawals after email confirmation; moving a six-figure position off the platform requires tier 2 with ID and address documents, reviewed over one to three business days - a delay that is invisible until you first try to leave.
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