18 proven KYC tactics to onboard crypto users faster and stop fraud

Key takeaways from the guide

• Most KYC solutions were designed with banks in mind. For crypto platforms, these solutions can add unnecessary friction during onboarding. 

• Crypto companies need tailored KYC tools and tactics to build compliance programs that drive growth and earn trust.

• One of the most important decisions you’ll make is your choice of KYC platform. Who you partner with will have a direct impact on business growth and user trust.

Know Your Customer (KYC) is all about identifying your platform’s users in order to reduce the risk of money laundering, terrorism financing, and other financial crimes. It’s essential for compliance, but for crypto users who expect instant access to trade, stake, or move funds, traditional verification can feel like an unnecessary barrier.

If you work in crypto, you probably already know that most legacy KYC tools weren’t built for your industry. They’re designed for banks; typically, they’re slow, outdated, and clunky. For crypto platforms, these tools can create friction that slows down onboarding and frustrates legitimate users. Even worse, they may fail to catch the sophisticated fraud schemes targeting crypto platforms.

But there is a better way. You can implement strategies that go beyond basic compliance to boost your conversion rates, improve onboarding speeds, and meet (or even exceed) user expectations. Instead of forcing crypto users through banking-style processes, you can design verification flows that account for crypto's fast-paced environment and unique risk patterns. 

This guide contains 18 KYC tactics designed specifically for crypto teams. With each tactic, we show you how to implement it, why it matters, and the impact it can have on your organization’s speed, conversions, fraud prevention, and compliance efforts.

KYC tactics for crypto platforms

• Build flexible identity flows that adapt to risk

• Adapt onboarding to meet global compliance standards

• Maximize cost efficiency without compromising compliance

• Enhance trust with partners, regulators, and users

• Implement precise workflow orchestration

Part 1: Build flexible KYC flows that adapt to risk

Crypto users come with vastly different risk profiles, so it's important to avoid cookie-cutter flows. By tailoring verification requirements to match each user's transaction patterns, geography, and risk indicators, you can fast-track legitimate users while applying enhanced scrutiny where it matters most. Let's review how.

1. Build separate flows for different user types

Different user types (e.g., individuals, businesses, investors) present different levels of risk and are subject to different verification requirements. Subjecting every user, regardless of type, to the same level of due diligence can cause you to undercheck high-risk accounts while forcing undue friction upon low-risk accounts.

Additionally, certain user types, like decentralized autonomous organizations (DAOs), may lack standard incorporation documents typically required to perform verification, raising a different set of challenges.

Once you understand how these risks differ between your user types, implement dynamic logic that sends each user down a different verification path tailored to their level of risk. Some signals that can help you here include things like wallet size, geography, and use case.

Impact: Faster onboarding for trusted users, stronger checks for whales or high-risk accounts (speed + compliance)

2. Auto-route users by region, risk score, or wallet type

User types are just one potential avenue for dynamically segmenting users into different KYC flows. In fact, there are a variety of signals that can help you achieve the right level of scrutiny without adding undue friction. Consider signals like:

• IP address

• Geolocation data

• Device fingerprint

• Browser fingerprint

• Wallet address checks

• Phone/email risk data

Most importantly, using these signals can help ensure you're subjecting users to appropriate KYC requirements, which can vary substantially by jurisdiction.

Impact: Reduces false positives, speeds onboarding for low-risk users, meets jurisdictional requirements (speed + compliance).

4. Embed flows directly in crypto wallets or mobile apps

Crypto users are notoriously skeptical about where their data goes. Redirecting users out of your crypto wallet or exchange app to a third-party site for KYC is a fast way to frustrate them and increase drop-offs.

To combat this, look for an identity platform that allows you to white-label and embed KYC directly into your wallet or exchange app. Depending on the solution, you can achieve this via SDK integration or embeddable components that make redirection unnecessary.

Impact: Higher pass rates and smoother UX (speed + compliance)

Part 2: Adapt onboarding to meet global compliance standards

KYC requirements can vary widely between jurisdictions. Regulations evolve constantly, making it challenging for compliance teams to stay current and avoid gaps that could expose their platform to risk.

The strategies below will help you navigate the compliance challenges of operating in multiple jurisdictions without sacrificing the user experience.

5. Use a provider with global coverage

When crypto companies are starting out with KYC, they're often surprised to learn that there's no universal standard. This is even more true globally. Every region has its own standards around ID types and formats (and the level of assurance they provide), acceptable verification methods, and database coverage.

One solution is to work with a KYC solution provider that already covers the vast majority of geographies you plan to serve. As you evaluate potential solutions, request a full coverage map that details the ID types, verification methods, and database coverage per market.

Impact: Faster product launches in new geographies without compliance blockers (speed + compliance)

Part 3: Maximize cost efficiency without compromising compliance

KYC and identity verification costs can quickly add up, especially if you're performing verifications manually or working with a solution provider that charges per inquiry, check, or verification. These strategies will help you manage KYC costs and protect your budget.

8. Define your own pass/fail rules

Out of the box, most KYC solutions come with pre-set pass/fail rules and name match requirements selected by the vendor so that KYC is easier to plug in and go. While this can speed up implementation if you're launching a minimum viable product, vendor rules are by definition not tailored to the needs of your business.

In most cases, crypto platforms need to be able to define their own pass/fail rules to avoid introducing unnecessary friction or risk into onboarding. Some factors to consider as you define your own pass/fail rules include:

• User location (i.e., high-risk vs. low-risk countries)

• Different regulatory frameworks by jurisdiction (e.g., MiCA vs GENIUS Act)

• Custodian or bank partner requirements and rules

• Risk profile by user type (high-volume traders vs. low-volume traders vs. yield farmers, etc.)

Impact: Balanced fraud control with minimal impact on conversion (fraud prevention + compliance)

11. Give compliance and fraud teams control over risk rules

Nobody in your organization knows evolving crypto regulations and licensing requirements like your compliance team. And nobody knows on-chain fraud patterns and scams like your fraud team. Giving these teams direct control over the risk rules underlying your KYC processes can enable:

• Quicker responses to regulatory changes. Whether it's new travel rule requirements, FATF guidance, or jurisdiction-specific KYC mandates, your compliance team can adapt instantly without waiting on engineering sprints.

• Faster adaptation to crypto-native fraud trends. From account takeovers to mule wallets and mixing services, your fraud team can update rules in real time as threats emerge.

• Freed-up engineering resources. You can keep your developers focused on product innovation, while risk and compliance teams fine-tune verification flows.

When evaluating KYC solutions, look for a platform that offers a UI-based rules engine or WYSIWYG editor that makes it easy for non-engineers to adjust workflows, thresholds, and triggers in real-time. 

Impact: Immediate adjustments to protect users and meet evolving requirements (speed + compliance)

12. Integrate fraud signals directly into KYC workflows

In the past, platforms that wanted to offer financial services had to make a trade-off between fraud and conversions. They could maximize fraud prevention by requesting as much information as possible from their users, introducing friction. Or they could maximize conversions by requesting the least amount of information possible, introducing the risk they missed something. But they couldn't do both. 

Today, it's possible to collect a wide range of passive fraud signals (such as device fingerprints, IP addresses, and behavioral cues) in the background during onboarding. Based on these signals, you can route users intelligently:

• Low-risk users (e.g., wallets with clean on-chain history, consistent behavior) move through a lightweight flow.

• High-risk users (e.g., addresses tied to sanctioned entities, mixing services, or suspicious velocity) are flagged for step-up verification like full KYC, enhanced AML checks, or manual review.

This approach lets you protect against fraud and financial crime without alienating legitimate crypto users, who are particularly sensitive to slow or burdensome onboarding.

Impact: Higher fraud catch rates without slowing good users (fraud prevention + speed)

Part 4: Enhance trust with partners, regulators, and users

When it comes to crypto, trust is paramount. If traditional banks and other regulated businesses don't trust you're capable of meeting their compliance needs, they won't partner with you. And if your users don't trust you're going to protect and secure their personal data, they won't share it with you for KYC. The strategies below will help you build trust with all of these parties.

14. Log everything: Verification decisions, timestamps, signals used

Your platform likely processes thousands of transactions daily, potentially across multiple jurisdictions. Eventually, you may face simultaneous inquiries from multiple regulators across different countries, each with varying evidence requirements. During these investigations, manual audit preparation just won't cut it.

Having a playbook in place for how you will deal with these inquiries can go far in impressing potential partners. More than that, it's just good business. Consider using a KYC platform that automatically stores immutable audit logs for every KYC decision and step. Comprehensive, immutable audit logs ensure you'll have the receipts regardless of who comes knocking.

Impact: Reduced legal and compliance exposure (compliance)

16. Package your compliance ops for partner reviews

Before agreeing to partner with you, banks and other TradFi institutions need to see you take compliance seriously. To help show you're prepared for rigorous due diligence, we recommend creating a crypto compliance kit for your partners. It could include:

• Verification and onboarding flow diagrams showing how you handle every step of KYC

• Decisioning documentation outlining how and why different levels of due diligence are triggered

• Up-to-date audit logs and reporting for transparency and regulator readiness.

Impact: Faster bank integrations and partner launches (speed + compliance)

Part 5: Implement precise workflow orchestration

With the right identity platform in place, it's possible to build a truly bespoke KYC process that tailors onboarding based on wallet activity, jurisdiction, and risk signals. These strategies will help you adapt dynamically to crypto-specific risks like sanctioned wallet interactions or high-value transactions, while still delivering a smooth experience for legitimate users.

17. Set KYC rules by geo, user type, and/or risk profile

Not all users or wallets carry the same risk. Treating every user as high-risk adds unnecessary friction and cost. On the other hand, assuming everyone is low-risk creates openings for fraud. 

With a modern identity platform, you can design tiered verification flows tailored to the types of users you serve. For example:

• Low-risk users (retail traders in low-risk geographies, wallets with clean histories) could be subject to the minimum KYC required.

• Medium-risk users (active traders with higher velocity or large transactions) could be routed through additional AML or sanctions checks.

• High-risk users (institutions, offshore entities, wallets linked to sanctioned addresses or mixers) could be escalated to enhanced due diligence or manual review.

By layering geo, user type, wallet activity, and other crypto-native risk signals into your orchestration, you can assign the right level of scrutiny in real time. 

Impact: Optimized verification for each risk level (speed + compliance)

Stay compliant with Persona

Persona is a unified identity platform for leading cryptocurrency exchanges, wallets, and infrastructure providers. We work with companies like MoonPay, Bridge, and BitGo to power instant verification for individuals and businesses alike by offering:

• Automated KYC, KYB, and AML compliance. Ensure a smooth onboarding for your users with dynamic verification flows that adapt based on real‑time risk signals.

• Cross-org token sharing. Reduce identity verification friction by sharing KYC data across your partners and the crypto ecosystem. Instead of duplicating checks or relying on ad-hoc integrations, our partners can exchange verifications through a secure, consistent framework with explicit user consent built in.

• Compliance with minimal engineering lift. Stay compliant with evolving regulations like MiCA, the GENIUS Act, and the Travel Rule. Persona helps you mitigate fraud around the globe without straining your engineering teams.

Looking for more strategies? Unlock the full guide for free today. Or, book a free consultation with one of Persona's KYC experts to see how your existing processes stack up — and how you can benefit from making a switch.