Are non-KYC cryptocurrency exchanges as safe as their KYC-compliant counterparts?

While the majority of crypto exchanges have begun to impose KYC criteria, investors can still choose crypto exchanges that offer more anonymity by not imposing KYC.

Many perceive the implementation of Know Your Customer (KYC) technologies in cryptocurrency as a deterrent to the Bitcoin (BTC) Standard, which has primarily promoted anonymous peer-to-peer transactions. Regulators, on the other hand, continue to promote KYC and anti-money laundering (AML) implementations as a means of ensuring investor safety and protection against financial crime.

While the majority of crypto exchanges have begun to embrace regulatory requirements in order to remain at the forefront of crypto’s mainstream development, investors can still choose crypto exchanges that promote more anonymity by not enforcing KYC processes. But, as an investor, does choosing the latter entail sacrificing safety?

It’s all about trust.

In most circumstances, anonymity works both ways. Owners of non-KYC (or non-compliant) crypto exchanges frequently seek to remain anonymous in order to evade legal attention. As a result, investors must have a high level of confidence in the persons in charge of administering the exchange.

Decentralized exchanges, on the other hand, such as dYdX, use trustless protocols to create a community-controlled trading platform. This, in turn, instills trust in investors despite the platform’s lack of a KYC obligation.