Why do most trading platforms require ID Verification?


The vast majority of the Bitcoin trading platforms both in the US and the UK require some sort of ID verification in order to make Deposits/Withdrawals.

Is this because of these two countries current legislation? does this obey to some sort of policy?



Posted 2015-10-18T16:41:16.097

Reputation: 43



In the US, these are called "Know your Customer", and "Anti Money Laundering" (KYC/AML) laws and is enforced by FINCEN (financial crimes enforcement network) in the US for any businesses that qualifies as a "Money Service Business" or "Money Transmitter".

This guidance published on March 2013, http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html , makes it clear that Bitcoin exchanges must comply with existing regulation for KYC/AML.


Posted 2015-10-18T16:41:16.097

Reputation: 1 967

1It also protects the exchange against all kinds of scams. It directly protects against a single entity controlling a large number of accounts and using them to perform wash trades or create false volume. And it indirectly protects against fraud because customers know that they exchange can come after them legally if they're not anonymous. – David Schwartz – 2015-10-19T04:35:05.073



These are the KYC rules for each country. Do not let places take advantage of you. I had one trader ask for a phone call verification from a country where that wasn't even the required law according to their KYC. So, work out your limits and what you feel comfortable with doing as a buyer and stick to it. You will find many traders that operate properly with you according to your personal privacy requirements.


Posted 2015-10-18T16:41:16.097

Reputation: 21


KYC and AML are required if the entity is moving money from A to B. Those entities are referred to as MSB (Money Services Business). However crypto exchanges are are not truly MSB's but they still do KYC and AML. See this insightful article: https://hackernoon.com/bitcoin-is-not-money-if-you-seek-compliance-you-are-asking-for-trouble-cbe9107e5298?source=linkShare-ea6a485c6847-1499320847


Posted 2015-10-18T16:41:16.097

Reputation: 19