AML and KYC in Crypto: What They Mean and Why They Matter

If you’ve been in the crypto space for any length of time, you’ve probably come across the terms AML and KYC. They’re more than just compliance buzzwords - they’re key pillars of how the cryptocurrency industry is regulated worldwide.

In this article, we’ll break down what AML and KYC mean in crypto, why they’re important, and how non-custodial verification platforms like Accredifi can help meet these requirements while preserving user control.

What Does AML Mean in Crypto?

AML stands for Anti-Money Laundering - a set of laws and regulations designed to prevent the illegal movement of funds, such as money laundering, terrorist financing, and other illicit activities.

In the crypto context, AML measures focus on:

• Monitoring transactions for suspicious activity
• Tracing the flow of funds on the blockchain
• Reporting certain transactions to regulators

What Does KYC Mean in Crypto?

KYC stands for Know Your Customer - the process by which financial institutions (and increasingly, crypto platforms) verify the identity of their users.

Typical KYC steps include:

• Collecting identity documents (passport, driver’s license, etc.)
• Verifying personal information
• Performing risk assessments based on the user’s activity

KYC is often paired with AML requirements to ensure that platforms aren’t being used for illicit purposes.

Why AML and KYC Are Important in Crypto

Crypto offers unique benefits - decentralisation, borderless transactions, and user-controlled wallets - but these also create risks if left unchecked.

Benefits of AML/KYC Compliance:

• Legitimises crypto businesses in the eyes of regulators
• Protects consumers from fraud and scams
• Builds institutional trust for partnerships with banks and payment providers
• Reduces risk of being involved in illegal activity unknowingly

The Challenge for Self-Custody Users

For many crypto users, especially those who believe in the self-custody ethos, traditional AML and KYC processes can feel invasive or risky. Handing over documents and full transaction histories to a third party may go against the principles of privacy and control.

This is where non-custodial verification comes in.

How Accredifi Fits Into AML/KYC in Crypto

Accredifi helps bridge the gap between self-custody and compliance:

1. Proof of Funds Without Custody

   Users can prove wallet ownership and balances without sending assets to an exchange.

2. Selective Data Sharing

   Institutions only see the information necessary for compliance (e.g., balance, chain) - not the user’s full transaction history.

3. Time-Limited Access

   Verification links can expire, ensuring data is not exposed indefinitely.

4. Auditable, Cryptographically Verified Proofs

   Every verification is signed, timestamped, and tamper-proof.

By combining cryptographic verification with selective disclosure, Accredifi allows institutions to meet AML and KYC obligations without asking users to give up control of their crypto.

Final Thoughts

AML and KYC in crypto aren’t going away - in fact, they’re becoming more important as regulation catches up with innovation.

The future lies in compliance without compromise: allowing users to keep their assets in self-custody while still proving they meet regulatory requirements.

That’s the problem Accredifi was built to solve.

Ready to explore compliant, non-custodial crypto verification? Get started with Accredifi today.