KYC — Know Your Customer — is the identity-verification process a regulated trading venue runs before letting an account trade, withdraw beyond a small threshold, or in many jurisdictions open an account at all. It exists because financial regulators require the businesses they license to know who is using their platform, not because any single exchange chooses to ask for a passport out of preference. The documents requested, the tiers of verification, and how much a trader can move before triggering a deeper check vary by regulator and by venue, but the underlying obligation is consistent across regulated markets.
A KYC obligation sits inside a broader anti-money-laundering framework that most financial regulators enforce on the businesses they license: a bank, a broker or a crypto exchange operating under a licence has to identify its customers, keep records of who they are, and be able to answer a regulator's or law-enforcement request about who controlled an account. The requirement follows the venue's licence — a licensed exchange offering crypto perpetuals runs the same category of check a licensed brokerage runs for a stock account, because both sit inside the same anti-money-laundering perimeter in most jurisdictions.
A typical first-tier check collects a full legal name, date of birth, residential address and a government-issued identity document — a passport, national ID card or driving licence — matched against a selfie or a short liveness video to confirm the document belongs to the person opening the account. A deeper, second-tier check, usually triggered by a higher trading or withdrawal limit, adds proof of address such as a recent utility bill or bank statement, and in some jurisdictions a declared source of funds. Institutional or high-net-worth accounts can face a further layer: some frameworks classify a client as a qualified or accredited investor only after documented proof of net assets above a stated threshold, which changes what products the account is allowed to access.
Beyond documents and a liveness check, a review can include screening against politically exposed person and sanctions lists — a standard control that flags accounts linked to government officials or sanctioned entities for additional review. This screening typically runs automatically at onboarding and again periodically for as long as the account stays open.
Most regulated venues gate account limits to verification level:
The exact numbers at each tier are set by the venue's own risk policy and by the regulator overseeing it, so a limit that applies on one platform does not transfer to another. Regulators frequently treat access to a leveraged or derivative product as carrying more risk than a straightforward spot purchase, and many licensing frameworks reflect that by gating derivatives specifically behind a higher tier or a distinct risk-acknowledgment step, separate from whatever tier unlocks basic spot trading — a venue that lets an unverified account buy a small amount of a token often still requires full identity verification, and sometimes a documented acknowledgment of leverage risk, before the same account can open a perpetual position, because the potential loss on a leveraged position can exceed the amount originally deposited.
KYC is the identification step inside a larger anti-money-laundering programme that also includes ongoing transaction monitoring and, for transfers between venues, the Financial Action Task Force's travel rule, which requires the sending and receiving institutions to exchange originator and beneficiary information above a threshold set by each jurisdiction. A venue that has verified a customer at onboarding is still expected to monitor that account's activity for patterns consistent with money laundering or sanctions evasion, and to file a report with its domestic financial intelligence unit when it does. See how AML compliance works for the monitoring side of the same framework.
A centrally licensed exchange runs KYC because its licence requires it; a wallet-based decentralized exchange, where a smart contract custodies margin, typically has no account to verify in the same sense — a trader connects a wallet and the protocol has no name attached to the address unless the front end operating the interface adds its own gate. That distinction is the basis of no-KYC perpetual trading , though it does not remove every rule: a jurisdiction that bans a product outright applies to a wallet-based venue the same as a centralized one, even without an identity check to enforce it at the account level.
A licensed venue is required to retain KYC records for a set period after an account closes — commonly five to seven years, depending on the jurisdiction's anti-money-laundering statute — and to protect that data under the same data-protection law that covers any other financial institution. That obligation cuts both ways for a trader: the data is collected because the law requires it, but it also means a document uploaded to one venue does not disappear when the account is closed. A trader who wants to know exactly how long a specific platform retains records should check that platform's own privacy policy.
KYC requirements are the identity-verification steps a regulated exchange must complete before an account can trade or withdraw beyond a small threshold, set by the anti-money-laundering law of the jurisdiction that licenses the venue. They typically include a government-issued ID, a liveness check, and, at higher limits, proof of address and source of funds.
Know Your Customer is the regulatory obligation behind KYC: a licensed financial business must identify who its customers are, verify that identity against official documents, and keep records a regulator or law enforcement can request. It applies to crypto exchanges under the same anti-money-laundering laws that apply to banks and brokers.
Perpetual markets for stocks, gold, indices and pre-IPO names — settled on-chain, no wallet-to-exchange transfers.
