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Kc  · 09/01/22

Buying Crypto Non-KYC: Where to do it with minimal risk?

Altcoin Trading Blog
06/27/23 · Crypto trading 101
There are risks to buying or trading crypto without KYC. Where are the safest platforms to buy crypto without KYC on?
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No-KYC exchanges: Top of the market in 2022



 

There is always the one exchange that gets the most attention…until a better one emerges. LocalCryptos have been on the top of the market for P2P no-KYC trading for at least 3 years now, but it is probably not going to change any time soon.

We’ve added Kine DEX into the list of trading no-KYC platforms and added LocalMonero as a P2P marketplace where you can buy for fiat.



Buying crypto without KYC: Know your risks

Back in the infancy of crypto trading, buying Bitcoin without KYC was the standard. Those days are gone, for better or worse.

KYC, or know your customer is now required by all big exchanges as per the ever tightening regulatory requirements.

The positive impact of KYC is that crypto purchases and withdrawal addresses are getting more documented as each day passes, which makes it far more difficult to use cryptocurrencies for illicit activities.

The negative is that make you effectively cut off from purchasing crypto just because a big exchange decided to block out traders from country on political or other discretionary reasons, not for reasons of criminal activity.

Hot takes asides, in all honestly for many traders long-form KYC questionnaires are just a superfluous evil they don’t want to spend time on.

For yet others, uploading your documents into a cryptocurrency exchange looks like a surefire way to get them abused and sold on the dark web. (This last group has been around the block, I can tell you.)

What to look for in a no-KYC exchange?

Buying crypto non-KYC is by far not without risks, though.

While you are not risking fraud by an exchange employee and you are not risking the exposure of your documents through a breach, like it infamously happened to Ledger, buying crypto non-KYC exposes you to the dangers of malicious P2P vendor or to a full-blown exit scam, where the whole no-KYC unregulated exchange vanishes with all user deposits.

Below are the three most important things to look for in a platform that claims to let you buy or trade crypto without KYC.

1. Non-KYC Crypto Exchange Should Be Non-Custodial

This is not 2011. Good part of the world knows what crypto is and that crypto exchanges exist - including the law enforcement. KYC requirements exist to prevent people from cashing out their criminal profits.

That makes sense. What makes arguably less sense is the other reason for KYC, which is to prevent people trading derivatives when an arbitrary financial authority decided that plebs shouldn’t do that. Anyway.

Custodial no-KYC exchanges such as formerly BitMEX are the most obvious platforms to target for hackers and for the law alike.

Your geolocation can be traced on custodial or non-custodial crypto exchanges the same, because of metadata like your IP, reused email address or reused username. The important difference however is that your crypto assets can only be seized from a custodial exchange, if you have it deposited there.

Non-custodial trading happens between two user wallets, ideally with an intermediary which is a smart contract that serves as an escrow. Even the Bitcoin blockchain has enough scripting capability to run a native escrow, by the way.

  • To trade custodial, you need to send your cryptocurrency to a wallet controlled by the exchange, giving up the control over your asset. (Non-custodial trading is done from a wallet only you control.)
  • To cash out custodial, you need to link your exchange to a bank account, which links your crypto to your IRL identity. (In non-custodial exchanges you need to let your counter-party know your bank account number, but good non-custodial platforms like LocalCryptos encrypt private communication, keeping your fiat-based identity secret.)

Even if you sign up on a custodial crypto exchange that boasts to not require KYC, there is no guarantee this will not change in the future and without any warning. We all know what happened to BitMEX, and frankly BitMEX made it last for way longer that seemed likely.

A small, under-the-radar custodial trading platform will be ignored by the authorities for a long time, but at some point it will get popular. Then it will inevitably have to start requiring KYC.

Some custodial exchanges aren’t very nice about it. Some crypto traders report the so-called “KYC Scam”, where crypto trading platforms like Bittrex, Poloniex or Changelly freeze withdrawal function to force users to submit KYC or else lose their deposit.

You probably get by now that using non-custodial platforms saves a lot of hassle. At this stage, non-custodial trading is not new either - cold staking and yield farming is almost exclusively done on non-custodial platforms, when you leave out Binance staking.

The selection of no-KYC markets good for buying is finally getting good enough too:

  • LocalCryptos is a zero-knowledge P2P market to buy or sell crypto for fiat. Zero-knowledge means that the company running the platform doesn’t have access to any user information - including the private messages between buyers and sellers. LocalCryptos supports all the oldest cryptos: BTC, ETH, LTC and DASH. These four coins are listed on most other crypto exchanges, where you can then trade them for low-cap cryptos or for restrictive coins like BNB
  • LocalMonero is a P2P platform where you can buy Monero without KYC. It is not a zero-knowledge dApp, it is basically just a message board, which is not ideal - but the XMR blockchain doesn’t support anything better than this. Traders report that LocalMonero vendors usually do not want to see your ID.
  • To trade and DeFi-stake altcoins on a non-custodial exchange, we have Uniswap or Kine DEX or aggregators like 1inch.
  • Futures and leveraged derivatives markets are being developed at LeverJ by community veteran crypto traders.
  • To trade crypto coins and tokens of different blockchains, without giving away custody of your assets, we have WhalesHeaven.

Note - LocalBitcoins platform is not recommended - more here

So there’s that. For buying crypto for fiat with no-KYC, do go non-custodial. As for trading, there’s plenty of DEX platforms to choose from too.

There are situations where you must trade custodial. It could be that you are a trader who works on short timeframes and you need the liquidity and market depth. If that is so, keep reading through the two following points.

2. Cheap and Easy Crypto Withdrawals

One of the warning signs of BitMEX being in trouble could have been the prohibitively high fees for crypto withdrawals (up to 10x the transaction fee for BTC). When a crypto exchange does something that discourages traders from withdrawing their money, you know the platform is in trouble.

In a good no-KYC exchange that is custodial, there should be a high upper cap on crypto withdrawals for no-KYC users. Exchanges might pull a story about mitigating abuse by criminals. This is nonsense, on public blockchains all transactions are traceable. Capping withdrawals makes no sense.

High withdrawal maxes

  • Bitfinex (6% off fees) has no maximum withdrawal limit for no-KYC traders. - This is great
  • Bitforex has a limit of max 100 BTC per 24 hours for no-KYC traders, with 10k+ USD withdrawals delaying a few hours for additional checks. - This is pretty good

Low withdrawal minimums and fees

A no-KYC crypto exchange will never announce they got hacked or seized before touching user withdrawals. Withdrawals will go first, only after some time will the users learn what actually happened and whether they have a chance of getting their crypto back. A 2020 showcase of the issue was the Chinese futures exchange OKEx, when it halted withdrawals due to trouble with the police.

You can avoid getting caught up in this type of mess by withdrawing your money to a crypto wallet often enough, for which you need the exchange to have low withdrawal fees and low withdrawal minimums.

  • Bitfinex (6% off fees) withdrawal minimum is “0.00012 BTC” (variable - 5 USD equivalent) with fee 0.0004 BTC for Bitcoin
  • Bitforex withdrawal minimum is 0.0010 BTC with fee 0.0005 BTC
  • Phemex withdrawal minimum is 0.0.0010 BTC with fee 0.00057 BTC

Easy withdrawals are paramount in custodial non-KYC exchanges as these are most likely to get in trouble at some point.

Now to re-iterate the previous key point: With regards to fully custody-free DEX platforms, you wouldn’t need to worry about a hack, nor about exit scam or too high withdrawal fees. The type of tech they’re using doesn’t allow them to have custody of your assets at all.

That means that having your funds stolen through a non-custodial platform wouldn’t be possible - you’re in control of your funds at all times. It also means they aren’t be able to impose withdrawal fees on you, because you are trading from your own wallet.

As for buying crypto for fiat on a non-custodial exchange, the place for that is LocalCryptos. Unlike LocalBitcoins, LocalCryptos is actually a dApp. That means the exchange knows no details about its vendors and buyers.

The process of registration on the exchange is absolutely anonymous: you only need a nickname and password. LocalCryptos is a dApp, so all transaction data is recorded on chain in the classic pseudonymous way: Cannot be tampered with or transferred to third parties, but once your address is tied with your real-world identity, all of your activity is easily traceable.

3. Proven Track Of Record, Exchange Reps on Reddit

A custodial exchange needs to have easily accessible customer support.

Private Telegram chats and 1-on-1 customer service is usually reserved for fully verified OTC traders, but everyone should be able to quickly reach out to an exchange representative on Reddit when they notice a problem with the platform.

Good track of record is important too - and not just a record of past without hacking.

Bitfinex was hacked in August 2016 but they handled the situation well by being upfront about it. They promptly organized AMA sessions with the community head and eventually came up with the redemption token scheme which made up for the losses individual users had to take - even for the losses of unverified users. (Note that legacy solutions offer no help for non-KYC users.)

Good handling of the incident leaves Bitfinex with a great track of records even though they were hacked, and a recommended non-KYC custodial exchange.

Either way, there is clearly a lot of demand for non-KYC crypto trading, because new platforms keep emerging every so often. One example is Bitforex, that only emerged very recently but became the mecca of non-KYC dog money trading.

List of best no-KYC crypto exchanges

  • (Custodial) Bitfinex: spot, margin, lending, futures, airdrops
  • (Custodial) Bitforex: perps, small alts, up to 200x leverage
    • No US resident policy (more about Bitforex in the review here)
    • Has perpetual swap, airdrops, NFT and Metaverse coins… anything that gets hyped
    • Short but so far good track of record
  • (Custodial) Phemex: perps, spot, tether, bonuses and competitions
  • (Custodial) WhiteBit: defi, staking, futures, airdrops
    • has limits
  • (P2P) Crypton Exchange: anonymous signup, runs on the Utopia p2p ecosystem
  • (P2P) LocalMonero: onramp from fiat into XMR
  • (P2P) LocalCryptos: onramp (p2p, zero-knowledge dApp) This platform is recommended for buying crypto for fiat without KYC
  • (Non-Custodial) Uniswap & its clones: spot trading and liquidity staking (high gas fees)
  • (Non-Custodial) dYdX: Layer 2 trading with as little as 10 USD worth and no fees, more functionality on Layer 1 Ethereum.
  • (Non-Custodial) LeverJ: futures trading and tokenized legacy assets

Word of caution: WhalesHeaven is a new p2p platform that does not have nearly as good cred in the community as LocalCryptos do.


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