Glossary

Know Your Customer (KYC)

1 min read

Know Your Customer (KYC) laws are intended to prevent financial instutions from being used for illicit money transfers by mandating that all financial accounts be identifiable to individuals or organizations.

KYC laws apply to almost all financial institutions who custody client funds, including Bitcoin brokerages and exchanges. KYC laws fall under the broader scope of Anti-Money Laundering (AML). KYC and AML requirements vary between jurisdictions, but the Bank Secrecy Act (BSA) directly addresses how both policies are to be implemented by banks.

Related Terms
Chain Analysis
Chain analysis uses heuristics to analyse the blockchain and trace ownership of bitcoin across transactions. Chain analysis is performed by companies who contract with governments and regulated institutions to provide insight into how individuals send and receive bitcoin.
Learn more.
CoinJoin
CoinJoin transactions provide increased privacy for users by breaking the heuristics used by chain analysis companies. A CoinJoin transaction combines inputs from several users and returns to each user the exact same amount, making it difficult to track users and their coins.
Learn more.
Exchange
An exchange is an institution which acts as a market-maker between parties who wish to buy and those who wish to sell. Exchanges simply facilitate trades between parties for a fee.
Learn more.
Brokerage
A brokerage is a financial institution which allows its customers to buy and sell assets directly. Brokerages differ from exchanges in that brokerages serve as the counterparty to its users in all transactions.
Learn more.
Explore More Terms →