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In the U.S., AML and KYC measures are mandatory for most crypto exchanges because they are defined as money service businesses (MSBs) under federal regulations. According to the Financial Crimes Enforcement Network (FinCEN), the Bank Secrecy Act (BSA) applies to companies that involve cryptocurrencies.
Custodial wallets are usually provided by crypto exchanges or financial institutions that are required to implement KYC. For non-custodial wallets, you generally do not need to complete KYC. These wallets give users full control over their private keys and their virtual assets.
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