Nowadays, if you want to trade cryptos on a centralized exchange, you will need to go through a KYC. It is a common standard within the investment industry and you will have to endure it at some point. However, there are an array of exchanges you can use that don’t require KYC so you don’t have to put your personal documents and identity on the line.
This article will go over the exchanges that do not require the KYC rule.
What does it mean?
KYC is an acronym for ‘Know Your Client’ (or in some cases, ‘Know Your Customer’). It ensures that investment advisors know detailed information regarding various elements about their clients. These include their risk tolerance, investment knowledge, and financial position. For context, risk tolerance is the overall degree of ‘variability’ in investment returns that an investor is willing to tolerate. In other words, the extent to which data sets deviate from the average value.
KYC provides protection for clients and investment advisors alike. The protection clients receive stems from having their investment advisor properly understand what investments are suitable for their personal situations. Investment advisors receive protection by way of knowing what they are able and unable to include in their client’s portfolios. Generally speaking, KYC compliance involves a variety of requirements and policies. These usually include risk management, customer acceptance policies, and transaction monitoring.
The Know Your Client rule is an ethical requirement for the securities industry. Particularly for those who are working with customers during the opening and continuing the maintenance of accounts. In July of 2012, two rules were implemented that effectively cover this topic:
- Financial Industry Regulatory Authority (FINRA) Rule 2090 (Know Your Customer)
- FINRA Rule 2111 (Suitability)
These two rules are in place as a way to provide the best protection for both the broker-dealer and the customer. Moreover, so that brokers and firms are able to deal with clients in a fair manner.
The Know Your Customer Rule 2090 states that every broker-dealer needs to use modest effort when opening and managing client accounts. It is necessary that they know and keeps records of the essential facts of each and every customer. Additionally, they need to be able to identify each person who has the authority to act on the customer’s behalf.
The KYC rule is especially crucial at the start of a customer-broker relationship. It establishes the most essential facts pertaining to each customer prior to making any recommendations. These facts are those that are necessary for servicing the customer’s account effectively. Furthermore, to remain aware of any special instructions concerning the handling of the account. The broker-dealer needs to also be familiar with each person possessing the authority to act on behalf of the customer. What’s more, they need to abide by the laws, regulations, and, of course, rules of the securities industry.
Trading in peace
KYC requires businesses to validate the identity of those who are using their service. This Is especially true when the situation calls for the transmission of money, including digital currencies. The outcome is that the majority of crypto exchanges are now enforcing KYC. However, using a KYC exchange (critics refer to them as ‘surveillance exchanges’) to trade is not at all mandatory. In fact, there are a number of exchanges that legally operate in jurisdictions that do not mandate KYC. Moreover, they do not have official headquarters, which places them in a grey area regarding legal obligations.
For the most part, KYC exchanges that are fully regulated provide better protection for their customers. Furthermore, there may be a considerable amount of redress in case something will go awry, like a hack. This, however, does not necessarily mean that KYC-free exchanges are less reliable. Ultimately, it is each trader’s responsibility to carry out their due diligence and select a reputable exchange.
It is easy to assume that shady individuals are the only ones who seek KYC-less exchanges. What’s more, that they are only useful for tax evasion and other criminal purposes. This is not entirely the case. As a matter of fact, there are plenty of traders who use these platforms because they know that KYC requirements make everyone comparatively less safe by creating a hub for hackers.
Are you someone who values their privacy, or more or the point, financial privacy? And do you want to keep your personal details out of the reach of any criminals lurking about? If so, then it makes sense to want to seek out platforms where you can exercise your right to safely trade cryptocurrencies. With that said, let’s go over some exchanges that are suitable for this purpose.
Examples of Exchanges that don’t require KYC
1 – Binance
With just over 6 million users, this exchange from the Hong Kong platform has become the world’s most popular cryptocurrency exchange. It was successful in taking this title from Bittrex and it boasts a 24-hour trading volume of up to $4 billion.
This extremely popular cryptocurrency exchange is also a beacon of support for KYC-less trading. There are, however, a few warnings that come with using it. First of all, it is a requirement for U.S. citizens to trade on Binance US, which comes with KYC. Another important thing to remember is that there are signs that Binance could transition to full KYC at some point. This is mostly because it has an obligation to comply with the several jurisdictions where it primarily operates.
For the time being, spot trading is accessible without the additional requirement of KYC. Moreover, you can withdraw up to 2 BTC per day. In the case of margin trading, as well as various other Binance products, there is a requirement for KYC.
2 – BitMax
BitMax is one of the most popular altcoin exchanges, effectively carving out a niche since its 2018 launch. There is a decent amount of liquidity, margin trading, and a wide range of coins. In addition, the platform has its own native token (BTMX) that provides a discount on trading fees, among other benefits.
The exchange maintains consistent airdrops and it allows users to earn USDT for lending BTMX. It is possible to make fiat deposits with the use of a credit or debit card. As a bonus, there is no requirement for KYC and it has a 2 BTC daily withdrawal limit.
3 – Nominex
Among the various features that Nominex flaunts are its low fees, fast trading engine, and complex bidding tools. You are able to deposit and withdraw up to 3 BTC per day and all without requiring KYC. The system of operation of this exchange from Seychelles stems from a popular affiliate program and offers demo accounts for traders finding their footing. In the near future, it plans on launching daily trading tournaments.
The order types that you can find on Nominex are:
- Stop Limit
- Trailing Stop
This platform offers additional benefits, including 24-hour trustworthy customer support. Not only that but holders of the native NMX token have trading fees that are reduced by 50%.
4 – BitMEX
BitMEX is another type of centralized altcoin exchange. This one is special because there is no requirement for you to go through AML and KYC for deposit and withdrawals. While it is a predominantly BTC exchange, you will also find a variety of altcoins. Some of these include DASH, Bitcoin Cash, Ethereum, Ethereum Classic, and Cardano.
When you use the BitMEX exchange, you don’t need to worry about liquidity. This is mostly because it possesses a huge volume that is worth over 126,000 BTC.
5 – Bybit
Bybit is a popular derivatives exchange that was founded in Singapore. It is a platform that has the potential to achieve more popularity. That is to say if BitMEX introduces KYC, which has been the subject of various rumors.
Bybit does not require KYC, though it’s worth mentioning that U.S. residents are excluded from trading. Its most popular product by far is the BTC-USD perpetual swap. However, it is important to point out that Bybit also offers users with futures for XRP, EOS, and ETH. Bybit provides a clear-cut and intuitive layout design and exceptional customer support that operates around the clock. Moreover, it operates in multiple languages.
Indeed Bybit has an array of attractive features. However, one of the best things about it is its informative guides to margin trading. These are helpful tools for traders looking to learn more about the terms, tricks, and tips for effectively swapping derivatives products. There is a Bybit mobile app that is available on the iOS and Google Play stores. In addition, regular trading competitions are making sure everything stays fresh and new.
6 – Kucoin
There are a lot of exchanges that operate in a partial manner when it comes to KYC. Kucoin is definitely one of them. This basically means that there is no requirement for most traders to complete the processes of verification unless there is suspicious activity. Alternatively, in a potential case of them wanting to exceed the daily trading limit of 2 BTC.
Similar to exchanges like Binance and Huboi, Kucoin would make the full transition into a crypto company. One that offers its clientele with a wide range of services, all of them operating under different subdivisions. Admittedly, the liquidity could be better, but Kucoin makes up for it with an array of favorable components. It is easy to use and it provides a list of the tokens that are not available on major exchanges.
7 – Bitcoin.com
There is a lot more to exchange.Bitcoin.com than simply being able to sign up without needing to undergo KYC. Its other attributes include BCH trading pairs, SLP tokens, and valuable assets that other platforms don’t have. In addition, there is the overall strength of the Bitcoin.com brand. This alone gives the exchange considerably greater credibility than various other KYC-less platforms existing on the market. The intuitive and attractive interface is void of any clutter and there is a sense of community to the exchange. This makes it especially popular with BCH enthusiasts.
8 – Changelly
Changelly is a centralized altcoin swapping service. It is a platform that never forces you to go through the KYC or AML in order to use its services. Moreover, there is no ID verification registration that you need to complete so that you can use their services.
For the best security, you can use this service along with a VPN. However, this method requires you to possess supporting altcoins like LTC/ETH/DASH. With them, you will be able to exchange for BTC or any other type of supporting the currency. If you do have altcoins, then you can purchase bitcoins in a matter of seconds. And you can do so with no verification process.
It is important to do research before you go forward with signing up for an exchange. The best way to do this is to read reviews and check its policies on platform access from different countries. Additionally, you can check the quality of its customer support.
Last but not least – and this is relevant to using centralized exchanges – regardless of KYC, do not leave all of your cryptos there. You should only deposit what you really need for trading purposes. What’s more, you should keep the rest of your stack within a noncustodial wallet. Trade safe and make sure to keep your identity private by steering clear of ‘surveillance exchanges’.