KYC (Know Your Customer) Overview

When working with KYC, a set of processes that verify the identity of users before they can transact on a platform. Also known as client verification, it helps prevent fraud, money laundering, and illicit financing. In the European Union, MiCA, the Markets in Crypto‑Assets Regulation explicitly defines the KYC standards that crypto‑asset service providers must follow, creating a passport system for cross‑border operations. This means any exchange that wants to serve EU customers must embed KYC checks that satisfy MiCA’s rules, linking regulatory compliance directly to user onboarding.

Why KYC Matters in Crypto

Modern KYC isn’t just about asking for a passport photo. Verifiable Credentials, cryptographically signed attestations of identity data let users prove who they are without exposing raw personal details. Paired with Decentralized Identifiers (DID), self‑owned identifiers stored on a blockchain, these tools enable a privacy‑first KYC flow that still satisfies regulators. For example, a user can present a verifiable credential proving they passed a background check, while the DID ensures the credential can’t be altered or replayed. This combination satisfies the semantic triple: KYC requires identity verification, and verifiable credentials provide that verification securely.

Compliance officers also rely on technical enforcement methods. Geofencing, software that restricts access based on a user’s IP location is commonly used by exchanges to block traders from jurisdictions where KYC rules are stricter or outright banned. When a platform detects an IP from a restricted region, it can automatically deny onboarding or flag the account for additional review. This illustrates another semantic triple: geofencing enforces KYC compliance by limiting access, and VPN detection tools further tighten the net by spotting attempts to mask location.

Beyond onboarding, KYC data feeds into broader compliance ecosystems. Automatic exchange of crypto tax information, mandated by frameworks like the OECD’s CARF, pulls verified identity data to match transactions with tax obligations across borders. Secure 2FA recovery methods also intersect with KYC, as they provide a safety net if a user’s primary verification method is lost. Together, these layers build a robust compliance stack that keeps the crypto market both open and trustworthy.

All of these pieces—MiCA’s regulatory blueprint, verifiable credentials, DIDs, and geofencing—form a connected web that shapes how crypto platforms handle user identity. Below you’ll find a curated list of articles diving deeper into each area, from EU passport rules to practical guides on bypassing geofencing with VPNs, and everything in between. Use this collection to sharpen your KYC strategy, stay ahead of regulatory changes, and adopt the tech that makes compliance less painful and more secure.