KYC verifies who you are, while KYT verifies what your wallet has done on-chain — and exchanges require both; Plastron runs the KYT-style wallet screening free so you can preview what exchanges will see.

Know Your Customer and Know Your Transaction are two distinct but complementary compliance processes that together form the foundation of AML at regulated crypto exchanges. Most people are familiar with KYC — the identity verification process where you submit a government-issued ID, a selfie, and sometimes proof of address before an exchange lets you trade. What fewer people realize is that exchanges also run a parallel process on the other side of the equation: Know Your Transaction, which screens the wallet addresses involved in each deposit against AML databases, regardless of whether the customer's KYC is complete and approved. KYC answers the question: who is this person? It verifies that you are who you say you are, that you are not on a politically exposed persons list, and that your stated source of wealth is plausible. KYT answers a completely different question: what has this wallet done? It analyzes the on-chain transaction history of the depositing address, checks it against sanctions lists and risk databases, and assigns a risk score based on the wallet's counterparty exposure. A customer can pass KYC perfectly — submitting a legitimate government ID and clean financial documentation — while still having a wallet that fails KYT because it interacted with a mixer three months ago. When KYT fails, the exchange freezes the deposit regardless of KYC status. The two systems run independently, and most users only discover that KYT exists when it catches something in their wallet history. Understanding the distinction between KYC and KYT is essential for understanding why exchange compliance problems can happen even to verified, legitimate customers.