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KYC, or Know Your Customer, is a regulatory process that financial institutions and cryptocurrency platforms use to verify the identity of their users. KYC procedures typically involve collecting personal information such as name, address, and government-issued identification to ensure that users are not involved in illegal activities such as money laundering or terrorist financing. In the crypto space, KYC is often required by exchanges, especially centralized ones, before users can trade, deposit, or withdraw large amounts of cryptocurrency. While KYC enhances security and regulatory compliance, it is often seen as a limitation on privacy in the decentralized world of crypto.
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