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KYC Meaning

Know Your Customer; the mandatory process of identifying and verifying the identity of a client when they open an account and periodically over time. It is the cornerstone of the global anti-money laundering (AML) framework.

For a user, KYC typically feels like an annoyance-taking photos of your passport and a "selfie." For the institution, however, it is a legal requirement that protects them from being used by criminals. If a bank or an exchange fails to perform proper KYC, they can face billions of dollars in fines or lose their license to operate.

The debate around KYC in the digital asset space is intense. Many believe that "permissionless" systems should not require ID, as it compromises privacy and excludes those without government documents.

Others argue that KYC is the only way to "bridge" the gap between the decentralized world and the traditional financial system, allowing for mainstream adoption.

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