KYC/AML

Know Your Customer and Anti-Money Laundering. Regulatory requirements that financial institutions must verify customer identity and monitor transactions for suspicious activity. Most CEXs are subject to KYC/AML obligations; most DeFi protocols are not. Under FATF guidance, VASPs must collect and retain originator and beneficiary data when transacting with self-hosted wallets. This requirement applies even where there is no counterpart VASP to transmit to, tightening the compliance perimeter around unhosted wallets without fully closing it. Source: FATF Best Practices on Travel Rule Supervision (June 2025). The boundary between regulated and unregulated is where most compliance risk currently concentrates.