KYC (Know Your Customer)

KYC stands for ‘Know Your Customer’: the identity check that banks, exchanges and Bitcoin apps must carry out before you can buy from them. It is meant to make money laundering and terrorist financing harder.

What is checked

Under Germany’s Money Laundering Act (Geldwäschegesetz, GwG), a provider must, among other things:

• identify you and verify your details,
• ask about the purpose of the business relationship,
• establish whether you are a politically exposed person,
• monitor the business relationship on an ongoing basis – where necessary, including the source of your money.^[1]

Identity can be verified with, for example, an official photo ID, the online ID function (eID) or a qualified electronic signature.^[2] In practice, this often happens via video identificationGlossaryVideo identification (video ident)A process in which you identify yourself with your ID document via video chat instead of visiting a branch. Providers use it for the legally required KYC check; scammers abuse it to open accounts in other people’s names.On the learning path: Stage 4 · Step 3 – Buying Bitcoin →In the glossary →×.

What this means for you

• Have documents ready: for larger amounts, providers often ask about the source of the money, for example a payslip, a certificate of inheritance or proof of a sale.
• Privacy: after KYC, your name is linked to your purchases and to the addressesGlossaryBitcoin addressA string of characters like ‘bc1q…’ that someone can send bitcoin to. It is usually derived from a public key, can be shared without risk to your funds and should be generated afresh for every payment.On the learning path: Stage 5 · Step 4 – First withdrawal →In the glossary →× you withdraw to.

From 10 July 2027, the EU Anti-Money Laundering Regulation (AMLRGlossaryAMLR (EU Anti-Money Laundering Regulation)An EU regulation against money laundering that applies from 10 July 2027. It bans anonymous accounts at banks and crypto service providers and caps cash payments in trade at €10,000. Self-custody of bitcoin remains permitted.In the glossary →×) explicitly prohibits crypto providers from keeping anonymous accounts.^[3] Bitcoin without KYC is still possible, for example via P2P tradingGlossaryP2P trading (peer-to-peer trading)Buying or selling bitcoin directly between private individuals, often via software that locks the bitcoin in an escrow address until the payment arrives. More privacy, but more effort and scam risks of its own.On the learning path: Stage 6 · Step 2 – Spotting scams →In the glossary →× – with its own risks; see Peer-to-peer & Bitcoin without KYC.