KYC On Crypto Platforms: Why It’s Necessary And What You Should Know

With the growing acceptance of cryptocurrency in India, and the wave of new users signing up on digital asset platforms, more users are being requested to complete the know your customer (KYC) processes. If you are a newcomer or a crypto investor, it's useful to have a basic understanding of how KYC works on crypto exchanges. Here’s key things you need to know.

What is KYC in Crypto

KYC is a procedure used by crypto platforms to verify the identity of their users. This usually involves submitting an ID, a photo, and sometimes proof of address.

It ensures that the account holder is who they say they are and isn't abusing anonymity. Most crypto exchanges ask users to complete the KYC process before allowing them full access to services.

Why Is It Important to Have KYC

KYC helps create a safer and more trustworthy environment for crypto users. The verification of identity lowers the possibility of threat, which includes fraud or illegal transactions. It ensures that users on the platform are authentic people and not just anonymous profiles. It gives users a sense of trust and accountability. If something unusual happens, the exchange can quickly identify and reach out to the concerned person.

It also helps platforms follow legal requirements and align with global financial standards.

Documents Required in KYC for Crypto Exchanges

1. PAN Card

Indian users must have a Permanent Account Number (PAN), which is used for taxation and financial tracking on Bitcoin platforms.

2. Proof of Identity

Your identification must be verified with a valid photo ID, such as a driver's license, passport or Aadhaar card.

3. Proof of Address

This could be an Aadhaar (if the address is up to date and visible), utility bill, bank statement, or rental agreement.

4. Live Photo or Selfie

To avoid impersonation, many platforms ask for a real-time selfie or a photo of you holding your ID.

Is KYC Mandatory on Indian Crypto Exchanges

KYC is commonly required on most regulated crypto exchanges in India. Exchanges, such as CoinDCX, CoinSwitch, and ZebPay require users to confirm their identity to begin trading, to make deposits, or to make withdrawals. This ensures that exchanges are operating within regulation and offer a level of security.

Even though a small number of decentralised exchanges might not need KYC, they might be riskier and have fewer features. The Financial Intelligence Unit of India (FIU‑IND) also mandates Indian crypto platforms to update user information and perform new KYC if an account is more than 18 months old.

Not completing the KYC process may result in restrictions, such as limited trading access, withdrawal issues or even account suspension. On the other hand, finishing KYC ensures smooth access to all features and supports a more transparent and secure crypto environment.