Protect Your Privacy: The Best Non-KYC Crypto Exchanges in 2022
Trade crypto without leaving a breadcrumb trail for hackers and intrusive parties.
Published Jan 27, 2022•Updated Aug 11, 2022
KYC, AML, GDPR. FML, right?
Here you are, just trying to buy the dip like your favorite crypto influencer recommended (even though it wasn't financial advice). But all these cartoon-sounding exchanges like Kraken, Gemini, and CoinEgg are asking for your private information.
What gives? Crypto was supposed to be "for the people," but it seems like we just traded in old gatekeepers for new ones. And with all the exchange hacks that have been making headlines, who says that your KYC data won’t end up on the darknet at some point?
These, my friends, are the issues we’re going to be addressing down below. And stick until the very end for my list of non-KYC crypto exchanges you can use today.
So let’s get you checked in. No photo-ID required.
KYC in the world of crypto
KYC in the world of crypto
KYC and AML are short for “Know Your Customer” and “Anti-Money Laundering”. In short, they’re a set of regulations that require financial service providers, like crypto exchanges, to authenticate the legal identities of their customers. The idea being that these procedures help to counteract money laundering, financial fraud, and terrorist financing.
Exchanges that don’t comply with KYC risk being shut down or heavily fined. A few horror stories of the latter:
- Larry Dean Harmon was slapped with a $60 million fine for operating two exchanges that basically “laundered” your Bitcoin.
- BitMEX had to pay $100 million in penalties to the CFTC and FinCEN for lacking comprehensive KYC and AML safeguards.
In the world of traditional finance, KYC isn’t all that big a deal. But in the crypto industry, KYC compliance is the subject of heated debate. On the one hand, KYC is meant to prevent financial crime. But on the other hand, KYC violates the privacy ideals that cryptocurrency was built on.
Like every rapper has said at one point or another in their lyrics: There’s levels to this shit. And in the world of KYC verification, these are the levels that new crypto investors have to go through:
Customer Identification Program (CIP):
The first and simplest level, the exchange collects your personal details through means such as your national ID, facial verification, phone number, and utility bills.
Customer Due Diligence (CDD):
At this level, the exchange does a background check to make sure you’re not part of any shady financial dealings.
Finally, the exchange keeps an eye on all your transactions going forward and flags any suspicious activity. In other words, this level never ends. An example of suspicious activity could be receiving large wire transfers from off-shore bank accounts.
And if the exchange deems you to be high-risk, then they could simply freeze your account — cryptocurrencies, fiat money, and all. This is one of the main reasons crypto experts recommend using an external wallet.
Now since cryptocurrency isn’t regulated on a global level, the amount of information each customer has to provide to get verified will differ by country and state. I’d hate to break it to you though, but if you’re masterminding your escape to a crypto-friendly country with little regulation, it might not be worth it in the long term.
Financial institutions like the Financial Stability Board (FSB), the International Monetary Fund (IMF), and others are working together on a global regulatory framework for cryptocurrency. The adoption of the General Data Protection Regulation (GDPR) in EU countries gives us a glimpse of what this could end up looking like.
But don’t let the FUD get you down. There are still reliable non-KYC crypto exchanges out there with as many coins as you can fit in your moon bags. Let’s look at the two main types of exchanges you’re going to be dealing with.
Types of non-KYC crypto exchanges
The crypto exchange sector is split into two large camps: centralized exchanges and decentralized exchanges. So that begs the question: which one should you use? Let’s evaluate both, starting with the big dogs who did more than $14 trillion in trading volume last year.
The concept of “centralization” refers to a system that has a single point of failure. With a centralized exchange (CEX), users have to trust the company to:
- Place their assets in safe custody
- Allow them to trade their assets as they see fit
Centralized exchanges have their risks though. As the famous adage goes: “Not your keys, not your coins.” So, if your KYC raises red flags, you can say adios to your crypto. On the plus side, some centralized exchanges allow users to trade without KYC, albeit with small deposit and withdrawal limits.
Aside from centralized exchanges that allow you to trade your fiat for crypto, some CEXes only support crypto-to-crypto trading. And since cryptocurrencies don’t belong to any nation, these crypto-to-crypto centralized exchanges are less likely to employ KYC as their fiat-to-crypto counterparts.
Finally, some exchanges also avoid implementing KYC altogether by residing in countries with little to no crypto regulations, like Seychelles. Now let’s travel to the other side of the camp.
With a decentralized exchange (DEX), users cut out the middle man. DEXes are simply platforms (oftentimes open source) that enable users to trade peer-to-peer through smart contracts. However, since there’s no central authority to ensure legal compliance, DEXes only support crypto-to-crypto trading.
Pros and cons of non-KYC crypto exchanges
Pros and cons of non-KYC crypto exchanges
Now that you’re up to speed on crypto KYC, let’s weigh the pros and cons of using non-KYC crypto exchanges.
Pros of non-KYC crypto exchanges
While KYC procedures are meant to prevent financial crime, there are legitimate reasons for not wanting to undergo verification.
One of the main selling points of cryptocurrency is anonymity. Well, at least that was part of Satoshi Nakamoto’s vision for Bitcoin. But ever since cryptocurrency became linked to criminal activities—like purchasing drugs and weapons on the dark web—regulators weren't going to let that slide.
Once you purchase cryptocurrency through a KYC crypto exchange, you attach your personal identity to a set of crypto addresses. This data can in turn be used to:
- Track your transactions outside of exchanges
- Target you for crypto taxes
- Attempt to break into your external wallet
But even if crypto enthusiasts were okay with KYC, there’s still the issue of trust. Sensitive customer data stored on exchange servers have been leaked too many times to count. Even an exchange the size of Binance got hacked back in 2019, where 10,000+ personal photos were stolen for ransom.
Depending on where you live, KYC can also act as a barrier to entry into the crypto market. Countries like China, Egypt, Morocco, and Algeria have all banned cryptocurrencies. There’s also a lot of regulatory uncertainty around crypto in the US, with New York having some of the strictest requirements.
This is, again, diametrically opposed to the ideals of cryptocurrency — which is meant to be borderless and accessible to all, particularly in case of a state collapse or rampant inflation.
As legitimate as the above-mentioned reasons are, you’ve got to admit that there are some downsides to total anonymity, including:
Since non-KYC crypto exchanges tend to be smaller operations, they might skimp on security measures and thus be easier for hackers to exploit. In the event of a hack, your crypto won’t be protected like FDIC-insured funds are either. Some centralized exchanges, like Coinbase and Gemini, do have insurance policies worth hundreds of millions of dollars.
A lack of KYC scares off investors that have a lot to lose, which in turn prevents crypto from becoming more widely adopted. Non-KYC crypto exchanges also struggle to build credibility with other financial institutions, which means they’re less likely to survive long-term.
Another day, another hack
Would you dump your crypto exchange?
Best non-KYC crypto exchanges
Best non-KYC crypto exchanges
I’ll tell ya, finding reliable non-KYC crypto exchanges is no easy task. A lot of the big-name exchanges that used to not require KYC, like Bybit, Changelly, and Poloniex, have succumbed to the regulatory pressure.
So let that be a lesson: Just because an exchange is non-KYC today, that could change with the snap of a finger. In either case, here are a few of the best non-KYC crypto exchanges out right now.
To trade on custodial crypto exchanges, you have to send your cryptocurrency to a wallet they control. A non-custodial exchange, on the other hand, is one where you control the wallet.
LocalCryptos is a non-custodial, non-KYC platform that combines the best of both worlds—the user-friendliness of a centralized exchange and the peer-to-peer trading of a decentralized exchange.
Huobi Global is the 6th largest centralized exchange as of this writing. And while it does require KYC for complete functionality, non-verified users in select countries can trade with up to $1,000 in fiat.
Uniswap isn’t just the most popular DEX on Ethereum, it’s also the largest DEX in terms of transaction volume ($2 billion+ daily). So if you’re looking to trade ETH or ERC20 tokens, this is your spot.
KuCoin is the go-to exchange for trading small-cap altcoins. They also have partial KYC, so traders can buy and sell without verification up to a limit. That limit is 1 BTC every 24 hours, which is definitely at the higher end of non-KYC limits.
If Ethereum’s gas fees are too rich for your blood, PancakeSwap on the Binance Smart Chain is a solid low-cost choice.