KYC (Know Your Customer)

KYC is the building block of cryptocurrency regulations because service providers (VASPs) can use the KYC mechanism to determine their users’ authenticity as citizens of any specific region or country. KYC protocols are highly significant in maintaining financial security and integrity. In the context of digital assets (VDAs), the Financial Action Task Force (FATF) has framed global documents for guidelines for AML and KYC protocols.

These guidelines have proven to be an effective measure to monitor and flag illicit activities and money laundering. Under the ambit of these guidelines, service providers can retract user identity documents like driving licenses, passports, or any other identity proof for KYC protocol.