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Synopsis: Once a crypto exchange has been selected, this article explains what’s next: how to sign up to an online cryptocurrency exchange, in detail. Following these step-by-step instructions should save the reader from the annoyance of having their verification application rejected.

Brace Yourself: Incoming Red Tape

As many exasperated users will attest, the experience of signing up to an online cryptocurrency exchange can be fraught with difficulty. Crypto is borderless and open to anyone – but most online cryptocurrency exchanges are firmly mired in a world where borders matter, bureaucracy abounds, and gatekeepers get to decide who gets an account and who doesn’t.

Coinmama helps users buy Bitcoin and Ethereum using a credit card. Their view on third-party exchanges is as follows: “In order to get from today’s world of bank accounts and cash to a world in which everyone is in complete control over their own finances, the reality is that we need to comply with both regulations. However, going forward, more and more value will change hands through the blockchain, which means we’ll see a steady transition towards greater anonymity. We don’t think regulation will ever go away completely (and that’s a good thing), but it will be a big step in the right direction.”

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Here is the distinction: crypto itself is borderless and open to all, but the online cryptocurrency exchanges are not. As long as transactions stay denominated in crypto, expect the system to work as advertised, with low-cost, fast execution, and no restrictions over who can be paid. It is when bank accounts are used to transfer fiat money in and out that re-introduces the banks and their regulations. It is worth noting that none of this is a problem if crypto is acquired through mining, or crypto is directly received as payment for goods or services. It only becomes difficult if a bank account is involved somewhere.

Online cryptocurrency exchanges always face an uphill battle to get a bank account for themselves. Compliance officers at banks are very risk-averse – the default position when something ‘outside the box’ crosses their desk is to say ‘no’. To get a ‘yes’, the online cryptocurrency exchange is usually forced to collect the same information from their customers that the banks themselves would gather. This is in order for the banks to comply with their own Know Your Customer (KYC) and Anti-Money-Laundering (AML) requirements.

Therefore, the issue isn’t really with crypto, but rather with the banking system. All the red tape is a good reminder – if one were needed – of what motivated the original crypto pioneers in the first place.

cryptocurrency exchange

Cryptocurrency Exchange Sign-Up & Verification Steps

The sign-up and verification process involves paperwork and demands for proof of identity. Frequently, applications are rejected if they do not fit the strict standards imposed. But by following these steps, the reader will do everything in their power to ensure this does not happen to them.

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Step 1. Enter Your Email Address & Create A Password

Make sure that the password is unique and not easily guessed. It should not be a dictionary word, and it should use a combination of numbers, lower-case letters, upper-case letters, and symbols. Use a password management tool to generate a random password, and to securely store it for later use. I maintain an up-to-date list of password management tools on citizensoftheworld.io/the-crypto-intro.

Step 2. Enable Basic Security (Two Factor Authentication)

Follow the exchange’s prompts to get Two Factor Authentication (2FA) enabled. This is the bare minimum security to have in place. 2FA involves downloading a smartphone app which generates a one-time code, which changes every minute or so. The user’s password stays the same, but to log in, the 2FA code is also required. The best app (for both Android and iPhone) is called “Google Authenticator”, which is capable of storing all the 2FA codes from multiple exchanges all in one place.

Step 3. Upload Verification Documents

Every online cryptocurrency exchange has slightly different requirements, but some of the documents to upload may include:

    • Identification document (e.g. passport, drivers license, government-issued ID card) – sometimes both the front and the back.
      • Date of birth and ID number must be clearly visible.
      • It must not have expired.
      • Make sure that all the edges are visible.
    • Proof of address (e.g. bank statement, utility bill).
      • It may need to be dated recently – e.g. within the last 3 months.
      • Some exchanges request two forms of identification.
    • A screenshot of the applicant
      • Possibly holding their identification document and/or a piece of paper showing the date and their signature.
      • Keep a neutral expression (don’t smile).
      • Remove any hats or anything that obscures the face.

Read the instructions provided by the exchange carefully, and do exactly as they say. If asked to upload a .jpg image of no more than 2 megabytes, then make sure to send the exchange precisely this.

Also, take special care to ensure the information always cross-matches. If the identity document submitted says “Rebecca”, then that is what should be typed in the ‘Name’ field – even if the applicant normally goes by “Becky”. If required to send two proof of address documents, make sure they show exactly the same address as each other. Getting any of this wrong can be grounds for rejection. It sounds excruciating, and it is – but there is very little flexibility in these rules.

Run through the following checklist before submitting the identity verification:

  • Images are clear (not blurry / out of focus)
  • Photos are not too dark / too much glare
  • No part of the image is cut off
  • Remember to attach an image of the back of your identification document (if requested)
  • The document is valid (not expired)
  • Fingers holding the identification are not obscuring any part of it
  • Not wearing sunglasses or a hat in the photo

Step 4. Wait

The exchange needs time to review the documents once submitted, and this needs to be done by a human. If they have a backlog of applications, there might be a wait of several days, or even several weeks. Unfortunately, there is no way to speed up the verification process. This is why it is so important to submit the application to the online cryptocurrency exchange well in advance of when the user wants to start trading.

Many online cryptocurrency exchanges are fast-growing startups, struggling to keep pace with the load of applications coming their way. Compliance departments can become overwhelmed if too many people apply at once – which tends to happen especially when crypto has recently been experiencing rapid price increases.

It is a great idea to use the waiting time to sign up to other online cryptocurrency exchanges – that way, even if (despite best efforts) one exchange rejects the applicant, they still have the chance to get approved by others. The reader needs to get approved by at least one exchange, so it is best to increase their odds by getting the clock ticking on more than one exchange at a time

Step 5. Receive Notification Of Outcome

Once the exchange has checked the documents, a message will inform the applicant whether they were approved or not. The bad news is, if rejected, they will have to start again. The compliance departments rarely explain why an application is turned down – all that is sent is “no”.

If rejected, try another exchange, or resubmit to the exchange that sent the denial. Some exchanges have a stand-down period for failed applications – so it might be necessary to wait 30 days before being allowed to submit the documents to the same exchange again. This is why it is so crucial to get the application as watertight as possible the first time around.

Armed with this advice, readers should be able to find an online cryptocurrency exchange to approve them. If the reader’s verification is approved with at least one exchange, they can get started with funding their account and use the exchange to buy their first crypto.

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