The KYC Process
KYC stands for Know Your Customer. It refers to a process that financial institutions use to gather data and contact information for identifying their current and potential customers. The purpose of KYC is to prevent dishonest and criminal financial activities such as fraud, money laundering, and other illicit activity, as well as the misuse of financial accounts.
In the cryptocurrency sphere, the use of digital currencies like bitcoin to perform illicit activities has received lots of attention. Reducing the rate of such is certainly beneficial to cryptocurrency and its reputation. This is why KYC is important. Reducing and eliminating money laundering and financial fraud is the clear advantage of KYC practices.
In the normal banking sector, KYC practices usually start before an individual becomes a customer of that bank or financial institution. The bank must first verify the identity of a potential customer before opening an account for him or her. For example, in the Nigerian Banking system, providing your BVN and other details are essential in the process of opening a bank account.
However, when it comes to cryptocurrency exchanges like Binance, users are able to create an account before concluding the KYC process. The only difference (between verified and unverified accounts) is that these non-verified accounts have limited functionalities with regards to fiat transactions. For example, on Binance, you cannot perform any actions with Fiat without completing your KYC. This means you can't deposit or withdraw Naira or any other government issued currency. This is because fiat is regulated by governmental laws and any transaction relating to them must follow the stipulated guidances. However, with cryptocurrency transactions, there is complete freedom and no need for identity verification.
Thus, if you hope to make transactions involving fiat such as making naira deposits/withdrawals or trading pairs such as ETH/NGN, BNB/NGN etc, completing your KYC is important as it would enable you to trade seamlessly and easily convert your earnings to naira and also put naira in your account to purchase crypto with.
For example, the KYC process for Nigerians on Binance could be completed using either BVN or identifying documents such as driver’s License, national ID card or international Passport as well as facial verification exercise. After completing the process and having your account verified, you can trade using Naira. Try it out today. Simply open a Binance Account with this link and complete your KYC.
Written by Owolabi Jeremy.