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What is KYC in crypto?

By Ben Tabas, Intrica Research · Updated · US and EU

Answer

KYC, or know your customer, is how a crypto exchange or wallet provider confirms who a customer is and judges the risk they pose. In the US, FinCEN's guidance of May 9, 2019, says crypto exchangers generally count as money transmitters, and their anti-money laundering program must include verifying customer identification. In the EU, the EBA's travel rule guidelines, applying from Dec. 30, 2024, extend the same customer data duties to crypto-asset service providers.

What KYC involves

  1. Collect the customer's identity details and verify them.
  2. Build a risk profile. FinCEN's May 9, 2019 guidance says a money services business must know enough about each customer to judge the risk level they represent.
  3. Monitor activity over time. The same guidance lists suspicious activity reports and record keeping among a money transmitter's duties.
  4. Pass customer details along with transfers where the travel rule applies.

The travel rule

In the US, FinCEN's May 9, 2019 guidance says a transfer of $3,000 or more, or its equivalent in crypto, can trigger the Funds Travel Rule, which requires firms to pass along set information about the sender and recipient.

In the EU, the European Banking Authority's travel rule guidelines, issued July 4, 2024, apply from Dec. 30, 2024. They extend the duty to include originator and beneficiary information to crypto-asset service providers.

Why KYC shapes growth

  • Partners check your compliance before they work with you. Google's crypto ads policy, checked Oct. 28, 2026, requires US exchange advertisers to hold FinCEN money services business registration plus state money transmitter status, or a bank charter.
  • A sign-up flow that lists the documents needed up front gives new users fewer surprises.
  • Explain your verification steps on a public help page, so users and AI engines can describe them correctly.

Check whether AI engines describe your exchange, its licences and its verification steps correctly.

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Sources

  1. Application of FinCEN's Regulations to Certain Business Models Involving Convertible Virtual Currencies (FIN-2019-G001) · FinCEN, May 9, 2019Supports: Exchangers generally qualify as money transmitters, the AML program must include verifying customer identification, and the $3,000 Funds Travel Rule threshold.
  2. 31 CFR 1022.210, Anti-money laundering programs for money services businesses · Legal Information Institute, Cornell Law School, Oct. 28, 2026Supports: Checked: the regulation requires an MSB's AML program to include verifying customer identification.
  3. EBA issues Travel Rule guidance to tackle money laundering and terrorist financing in transfers of funds and crypto-assets · European Banking Authority, July 4, 2024Supports: EU travel rule guidelines issued July 4, 2024, applying from Dec. 30, 2024, and covering crypto-asset service providers.
  4. Cryptocurrencies and related products · Google Ads policy help, Oct. 28, 2026Supports: Checked: US exchange advertisers need FinCEN MSB registration plus state money transmitter status, or a bank charter.

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General information, not legal advice.

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