KYC (Know Your Customer)
The identity checks a regulated issuer runs on an investor before that investor may hold its tokens; on chain, the result is recorded in an identity registry the token consults on every transfer.
Know Your Customer (KYC) is the process a regulated issuer uses to verify who an investor is, and whether that investor is allowed to hold a given security, before accepting them.
Permissioned token standards such as ERC-3643 carry the result on chain. A wallet that passes KYC is linked to a verified identity in an identity registry, and the token asks the registry on every transfer whether the receiver is eligible. A wallet that failed KYC, or was never checked, cannot receive the token directly.
The check only protects the paths that ask it. A wrapper, vault, lending market or bridge that holds the token on behalf of others, and issues its own freely transferable shares, can give an unverified wallet the same exposure without the registry ever seeing it. Compliance has to run on every transfer path, including the shares of any contract that holds the token for someone else.
Related Terms
ERC-3643
A token standard for permissioned security tokens that integrates identity verification and compliance checks directly into transfer logic.
Identity Registry
ERC-3643 component acting as source of truth, mapping wallet addresses to verified on-chain identities and enabling compliance checks before transfers.
On-Chain Identity
Decentralized identity system (ONCHAINID) based on ERC-734/735 that decouples user identity from wallet addresses, enabling key rotation and portable credentials.
Real World Asset (RWA)
Physical or traditional financial assets tokenized on blockchain, such as real estate, bonds, or commodities.
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