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While the cryptocurrency world was once completely anonymous and unregulated, the two terms kyc and aml have become essential as they have become part of the mainstream financial system. These regulations are mainly designed to keep the crypto market crime-free and transparent.

1. What is kyc (know your customer)?

kyc stands for "Know Your Customer". It is a process through which a financial institution or crypto exchange verifies the identity of its users. When you open an account on an exchange (such as Binance or Coinbase), they ask for some information from you such as a government ID (NID, passport or driving license), a live photo or selfie (face verification), proof of address (electricity bill or bank statement). The purpose of these is to ensure that no one can make financial transactions using a pseudonym or fake identity. It ensures that there is a real person or legitimate entity behind each account.

2. What is AML (Anti-Money Laundering)?

AML or "Anti-Money Laundering" is a set of laws and policies that protect criminals from laundering illegally obtained money. Exchanges use special software to monitor large or suspicious transactions. If an account is found to be making unusual transactions, the account is frozen and the authorities are notified according to the AML policy. The main goal of AML is to prevent money from drug trafficking, human trafficking, corruption, or illegal arms trade from being laundered through crypto.

3. Why are these rules necessary in cryptocurrencies?

Due to the decentralized nature of cryptocurrencies, criminals initially tried to use them. But now, the situation has changed due to KYC/AML. These rules are strictly followed so that militant groups or terrorist organizations cannot exchange money. When the government knows who is transacting how much money, it is easier to impose the correct tax on it. Exchanges that comply with these rules are allowed to do business legally in different countries. This increases the confidence of ordinary investors. If a hacker steals money from your account and takes it to his KYC verified account, he can be easily identified.

4. Impact on users

Aspects	Advantages	Disadvantages
Security	There is a chance of recovery if the account is hacked.	There is a risk of personal information (Identity) being leaked.
Transaction limits	If you complete KYC, you can make large transactions every day.	The transaction limit without identity verification is very low.
Privacy	The government or organization has your identity, which helps reduce crime.	The main mantra of crypto is 'Privacy' or 'Anonymity' is lost.

5. DEX and KYC-free transactions

Some decentralized exchanges (DEX) such as Uniswap or PancakeSwap still do not require any KYC. This is called Non-KYC Trading. However, by 2026, many countries are trying to indirectly bring these platforms under AML rules so that criminals do not get any opportunity.

Conclusion

In short, KYC is about knowing your identity and AML is about monitoring the source and movement of money. While many crypto enthusiasts see these regulations as infringing on personal freedom, they are essential to establishing cryptocurrency as a safe and respected financial system around the world. Today's discussion concludes here. I hope you've found it interesting. Please share your thoughts on today's topic. Prayers for everyone. May everyone be well. Amen.

Me behind the camera & keyboard

I’ve always loved sharing my passions with you — from crypto and movie reviews to photography, storytelling, and blogging. Now, continuing that creative journey, I’ve stepped into a brand-new world — Gaming ! 🎮 | 🎥 On my YouTube channel Bokhtiar The Survivor — I’m consistently working to bring you the raw thrill of my gaming experiences — the emotions, the excitement, and those unforgettable moments that make every game feel alive.