Jeffrey Epstein was becoming increasingly concerned about tax policy in the United States related to Bitcoin and other cryptocurrency towards the end of his life—and hoped Steve Bannon could help, according to newly released emails from the convicted sex offender’s estate.

In a February 2018 correspondence, Epstein pressed Bannon, President Donald Trump’s onetime confidant and chief strategist, on his ability to get answers from the U.S. Treasury Department about crypto.

“Will [T]reasury respond to you re: crypto or do we need another way in for advice,” Epstein wrote to Bannon.

Bannon replied that the issue was then being mulled at the federal level by the “NSC,” or National Security Council, not the Treasury Department.

“Understood,” Epstein replied. “But there is an office of terrorism finance at [T]reasury that has thought about tax.”

The alleged sex trafficker, who was the subject of a federal money laundering probe according to emails revealed last month, went on to recommend to Bannon that the Treasury Department create a voluntary disclosure form for realized crypto gains to “fuck all the bad guys.”

Much about Epstein’s finances and personal investments remains shrouded in secrecy, years after his death in a Manhattan prison cell while awaiting trial on sex-trafficking charges. But the late financier was widely known to have shown an interest in Bitcoin and other cryptocurrencies. 

His correspondences with Bannon suggest a growing concern about the regulatory fate of crypto, years before the U.S. government had established a clear view on the issue.

In a followup email to Bannon, Epstein used the presumably hypothetical example of buying furniture with Bitcoin on Overstock—then known as the first major retailer to accept Bitcoin as payment—and realizing a taxable gain on the disposed crypto.

In another email, Epstein described “our cr[y]pto coin issues” as U.S.-based and “predominantly” related to tax, regulation, and disclosure. It is unclear who Epstein was referring to then, beyond himself, when describing “our crypto coin issues.”

“World wide, a whole different bag,” he added. “Some bad shit. Very bad,” Epstein wrote.

In 2019, the Wall Street Journal reported that a source familiar with Epstein’s business practices said the financier claimed to work for the U.S. Treasury Department on “cryptocurrency and anti-hacking efforts.”

Crypto comes up numerous times in the more than 20,000 Epstein-focused emails and text messages released by Congress on Wednesday—and in most situations, the documents indicate the wealthy criminal was intent on getting crypto regulations pushed through the first Trump administration. 

In one text correspondence from September 2018, Epstein told an associate that “crypto needs to be thought of [as] similar to the internet,” and approached with international agreements and “coordinated understandings.”

“Otherwise it is a Ponzi scheme outside of the law,” he said.

In June 2019, less than two weeks before he would be arrested and charged with sex trafficking minors, Epstein went on a tirade against Libra, Facebook’s failed stablecoin project.

“Libra is not a currency!! It is money… not the same,” Epstein wrote in an iMessage to an associate, arguing emphatically that the project “could take down [the] financial system” if put in the “wrong hands.”   

The sex offender then went on to assert: “That’s the reason I didn’t pursue.”

It’s unclear if Epstein was referring to Libra specifically, or stablecoins generally. Decrypt reached out to David Marcus, Libra’s co-creator, regarding whether the project ever sought or received interest from Epstein about a potential investment, but did not receive a response.

Years prior, sometime before March 2015, Epstein apparently met at his Manhattan townhouse with Brock Pierce, co-founder of the stablecoin giant Tether, according to other emails released by Congress this week.

In another correspondence with an associate, dated April 2018, Epstein appeared tickled by how digital assets were starting to find a broader user base.

“Interesting crypto, everyone wants in,” Epstein texted the associate. “So amusing.”

Following through on hints that MicroStrategy would get into Bitcoin software development as the Ordinals craze took off last summer, the company this week announced MicroStrategy Orange, a decentralized identity (DID) platform. The sprawling concept has applications for combating social media bots and spam, authenticating documents, and securing medical records.

As the proposed specification for Orange went public on GitHub, it received a mixed reaction from Crypto Twitter, in part due to its technical complexity of the plans. Here’s a basic primer on the proposed digital ID system, and how it ties into Bitcoin.

What is MicroStrategy Orange?

MicroStrategy Orange is a Bitcoin-based decentralized identity (DID) system that was introduced by MicroStrategy co-founder and Executive Chairman Michael Saylor, alongside Executive VP of Engineering Cezary Raczko, at the annual MicroStrategy World conference on May 1.

MicroStrategy Orange is an attempt to facilitate immutable, or permanently fixed, decentralized identities. These identifiers would then provide a way for individuals to control and verify their identity without relying on a central authority.

How would Orange be used in real life?

MicroStrategy said the potential of MicroStrategy Orange and decentralized identifiers on Bitcoin could also be used to verify users on social media applications, or authenticate text messages or medical records.

For example, a social media app could verify a user’s DID on the Bitcoin blockchain and display an “orange check” to other users. Or a medical record’s metadata—perhaps a hash of its contents at a fixed point in time—could be stored on Bitcoin and used to authenticate its owner and that it hasn’t been modified. Public records like land and home deeds could also be inscribed on the Bitcoin blockchain.

What is DID:BTC, and how does Bitcoin fit into it?

By establishing a decentralized identity system on Bitcoin, dubbed DID:BTC, users can benefit from the robust security and global decentralized network of the Bitcoin blockchain.

According to MicroStrategy, DID:BTC uses a modified version of Ordinals inscriptions. Introduced in January 2023, Ordinals inscriptions are digital assets (images, text, music, videos) that are “inscribed” onto an individual Satoshi, the smallest denomination of a Bitcoin.

In the case of MicroStrategy Orange, the inscription space would be used to store DID-related data and updates. This identity, authentication, and verification information would be separate from other digital data—for example, images or documents—which would be stored elsewhere.

As a result, DID-authenticated files could be created and updated without hitting size or content restrictions, yet take advantage of the cost-saving mechanism introduced by the Segregated Witness (SegWit) protocol in the Bitcoin network.

SegWit, introduced in 2017, increases Bitcoin’s block capacity by separating signature data from transaction data, reducing transaction sizes and enhancing scalability.

What does the proposed DID:BTC specification tell us?

The preliminary draft of the Bitcoin Orange plan was published on GitHub, allowing public inspection, comment, and eventually in-line discussion and collaborative edits. While largely technical, it covers several major topics, including how data would be formatted in Bitcoin inscriptions and its privacy implications.

For example, the spec allows for updates to be made to DID:BTC identifiers on-chain. While the original DID identifier is immutable, the associated content and keys associated with it can be modified.

Updates to DID:BTC identifiers are made using JSON, a standard format for data exchange.

In cases where an identity needs to be removed, meanwhile, MicroStrategy said a DID:BTC identifier can be deactivated by “spending” it—setting a flag using residual UTXO (unspent transaction output).

What are critics saying about MicroStrategy Orange?

Reactions to MicroStrategy’s announcement were mixed on Crypto Twitter, with some Bitcoin enthusiasts saying DID data is not welcome on the world’s dominant blockchain. It’s a similar reaction that we’ve seen to the rise of Ordinals inscriptions, along with Bitcoin meme coins via the BRC-20 and Runes token standards.

“I don’t like shitcoins at all, but if I close my eyes this speech sounds like it coming from the US government,” one post said, with another calling Saylor “fed boy.”

“WTF is this dog vomit trash? No. Never. No,” another replied.

Saylor had honed in on the commercial implications of Ordinals inscriptions as soon as they emerged, Bitcoin proponent and venture capitalist Preston Pysh pointed out.

When will we be able to use Orange?

MicroStrategy did not say when the Orange protocol would come online, and noted that information published on GitHub is an unofficial early draft. Even when finalized, there’s no telling whether other Bitcoin projects, crypto platforms, or apps would make use of it.

Edited by Ryan Ozawa and Andrew Hayward

Know Your Customer

KYC, or Know Your Customer, is a process used by financial institutions and businesses to verify the identity of their customers. This process involves collecting and verifying documents to prevent fraud, money laundering, and terrorist financing. KYC helps organizations assess the risk associated with their customers and ensures compliance with local laws. It is also referred to as “Know Your Client” in some contexts. kychub.com+3

S[ACER

KYC in Crypto: The Real Reason Exchanges Need Your ID
Why do regulators want crypto exchanges to ‘know your customer’ and how is it changing the face of DeFi?

by Ryan Hesketh.
Published: March 1, 2025 │ 4:00 PM GMT

Created by Kornelija Poderskytė from DailyCoin

Try to sign up for any major crypto exchange today, and you might be surprised when you’re running for your passport. But, thanks to ‘know your customer’ rules, that’s pretty likely to happen – or at least you’ll have to take a selfie.

If you thought that crypto was a decentralized utopia where anonymous transactions elude regulators and big financial institutions can’t track your bitcoin, NFTs, and more, this might feel like a betrayal. But this hasn’t always been the case; it’s a pretty new phenomenon. 

But why? Why do Binance, KuCoin, Kraken, Coinbase, and Bitget suddenly require your personal data to buy crypto? And doesn’t that fly in the face of the whole idea of decentralization? The answer is regulation, specifically KYC regulations.

‘Know your customer’ (KYC) means regulations and customer due diligence that financial institutions are compelled to follow regarding knowing their customers’ identities—simple, right?

Basically, anyone providing financial services has to know exactly who they’re providing them to in real-time. To do this, they have to prove that they have put KYC measures in place. 

If you don’t meet these regulations, and you’re supposed to, exchanges run the risk of sanctions in whatever jurisdictions they operate in.

KYC has been introduced to the crypto world over the last few years. Regulators, including the US SEC and the UK’s FCA, have broadened the scope of existing financial rules to include centralized cryptocurrency exchanges. To many, this may have gone unnoticed. But for those new to crypto assets, it’s especially noticeable since KYC compliance always takes place during the onboarding of new customers. Ultimately, KYC is supposed to prevent criminal activities like money laundering, terrorist financing, and fraud.

How Does Crypto KYC Work?

During KYC identity verification, users typically must provide personal information such as their full name, date of birth, address, government-issued identification (such as a passport or driver’s license), and sometimes additional documents or biometric data. The platform then verifies this information through automated checks or due diligence by compliance personnel.

Once the KYC process is complete and the user’s identity is verified, they are usually granted access to the platform’s full range of services. Once you’re in, you can buy and sell currencies, stake coins, and use your various crypto wallets. Just as long as you don’t commit any financial crimes, that should go without saying.

What Are the Types of Crypto KYC?

In crypto exchanges, KYC verification processes can vary in complexity and the level of information required from users. Specific KYC requirements and procedures depend on the exchange and factors such as regulatory compliance, risk management policies, and the platform’s target market. These are the major types:

Basic KYC: Collecting basic information such as the user’s name, email address, and sometimes a phone number. Basic KYC may be sufficient for users who want to trade small amounts of cryptocurrency.
Intermediate KYC: In addition to basic information, intermediate KYC may require users to provide more detailed personal information such as their address, date of birth, and government-issued identification (e.g., passport, driver’s license, etc.). This level is typically required for users who want to trade higher volumes.
Enhanced KYC: Enhanced KYC involves more thorough verification processes, which may include submitting additional documents or undergoing more extensive identity checks. This is for users who want to access advanced trading features, withdraw large amounts of funds, or engage in certain high-risk activities.
Corporate KYC: Some crypto exchanges offer KYC procedures specifically tailored for corporate entities or institutional clients. This may involve verifying the company’s legal status, identifying beneficial owners, and providing corporate documents such as registration certificates and incorporation papers.
Geographic-specific KYC: In compliance with local regulations, some crypto exchanges may implement KYC procedures specific to users from certain geographies. These will be different depending on where you are; for example, they’re more likely to be stricter in the US, the UK, or Japan than in the Middle East.
Tiered KYC: Tiered KYC systems involve different levels of verification based on the user’s intended activity level or the services they wish to access on the platform. Users may need to complete additional verification steps to unlock higher tiers with increased account limits or access to more features.

Why Does Crypto Regulation Now Include KYC?

Financial regulators around the world have been tightening up on the crypto industry for the last few years. Concerns about money laundering, funding for terrorism, and the lack of taxability have pushed lawmakers to call for stricter rules. Regulatory authorities often mandate KYC verification in many jurisdictions to ensure that cryptocurrency exchanges and other platforms comply with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.

It’s also a sign of a maturing industry, as cryptocurrency exchanges are being seen more and more as legitimate financial institutions. Gone are the days when crypto was the ‘wild west’ of finance (though some of its more niche corners could still be described as such); we’re now living in the era of serious clout for crypto’s major players. While crypto’s total market cap value counts in trillions, that’s as much, if not more, than many significant banks. 

The net is tightening around crypto, that’s true, and some see it as a betrayal of some of the fundamental promises of blockchain technology. However, the flip side is that crypto has to abide by the same rules as other institutions, which means it is being seen as legitimate, which could be a step along the road to adoption in a much broader sense.

Why Choose an Exchange with KYC?

Enhanced Security: Verifying users’ identities through KYC procedures ensures that the platform they use is secure. It helps prevent unauthorized access to accounts and reduces the likelihood of fraud, identity theft, and other scams.

Risk Mitigation: Robust KYC helps exchanges assess the risk associated with individual users and crypto transactions. By collecting and verifying user information, exchanges can more effectively identify suspicious activity, such as large cryptocurrency transactions or unusual patterns. The exchanges can then use this information to lower their risk profile and increase functionality, providing a smoother, more secure experience.
Access to Financial Services: KYC verification enables users to access a wider range of financial services and features offered by crypto exchanges. Users who complete the KYC process may have higher transaction limits, access to advanced trading features, and the ability to participate in initial coin offerings (ICOs) and token sales.
Legal Protection: Implementing KYC procedures can provide legal protection for crypto exchanges by demonstrating their efforts to comply with regulations. During audits or investigations, exchanges with KYC processes are better positioned to avoid sanctions or penalties. This means anything you have to do with the exchange isn’t hampered by sudden legal troubles.
Reduced Fraud and Chargebacks: KYC procedures help exchanges verify the identity of users before they can deposit funds or execute transactions. This reduces the risk of fraudulent activities, such as unauthorized account access, stolen credit cards, and chargebacks, which can result in losses for both the exchange and its users (you).

What Are The Cons of Crypto KYC?

Data Breaches: Storing large amounts of user data for KYC purposes increases the risk of data breaches. If exchanges’ databases are compromised, users’ personal
information could be exposed to hackers, leading to identity theft, fraud, or other nasties.
Privacy: KYC requires users to provide sensitive personal information to cryptocurrency exchanges. You might be concerned about this from a privacy perspective, as some users are uncomfortable sharing such information.
Centralization: KYC procedures introduce a level of centralization to the decentralized ethos of cryptocurrencies. Users must rely on centralized exchanges to verify their identities, which goes against the principles of decentralization and censorship resistance that many cryptocurrencies aim to uphold.
Slower Onboarding: Completing KYC verification can be time-consuming and may delay access to exchanges and their services. You might have to face a lengthy onboarding process, which can be especially annoying if you’re eager to start.
Increased Cost: Implementing and maintaining KYC procedures can be costly for cryptocurrency exchanges. It requires investment in compliance staff, technology infrastructure, and other aspects of compliance. These costs may ultimately be passed on to you as higher trading fees or account maintenance fees.
Entry Barriers: Robust KYC requirements may act as barriers to entry for people who are unable or unwilling to provide the necessary documentation. This can end up excluding individuals from certain places, marginalized communities, or those without access to ID from participating in the cryptocurrency ecosystem.
Potential for Exploitation: Despite KYC procedures, malicious actors may still attempt to circumvent identity verification requirements through identity theft, fake documents, or other fraudulent means. This poses a challenge for exchanges in detecting and preventing illicit activities despite their efforts to implement KYC controls.

Top Tips For Passing Crypto KYC Checks

Passing crypto KYC checks can be a nightmare, but it doesn’t have to be. As long as you’re prepared, accurate, and not secretly funding anything illegal, you should be fine. It’s probably a good idea to have your documents prepared before you begin tackling KYC, which is likely to include a form of government ID. Crucially, these documents need to be legible. Even a tiny bit of blurring or poor choice of cropping can lead to rejection, putting you right back where you started.

Also important is to make sure your information actually matches. Don’t put in your current address if your old address is on your documents, and definitely don’t spell your name differently. Be precise and you’ll save yourself a headache later on. 

If a selfie is required, make sure it’s clear. You want a well-lit photo taken on a neutral background without anything obscuring your features. Take off that hat and those glasses; they won’t help you here. Think of the biometric selfie as a passport photo and take it just as seriously.

The final step in passing your crypto KYCs is simply to be patient. If you’ve followed all the instructions carefully, submitted clear documents, and taken a stunning (if serious) selfie, you’ll have to wait. Some exchanges use automated processes, which are quicker but can be frustratingly robotic about details. Others use human eyes to assess their applicants, which takes longer but tends to be more forgiving. If you’ve done everything right, there’s no reason you should be rejected, so just put your feet up and dream of how secure all your transactions will be.

On the Flipside

Some believe that KYCs fly in the face of the central tenets of decentralization. Detractors say that far from providing extra security, KYCs are simply states attempting to take control of something that was always supposed to be outside of their mandate. The true DeFi heads in the community believe in the perfect freedom that anonymity allows. As such, there are plenty of no-KYC exchanges operating in 2025.

Why This Matters

If you’re a new or experienced cryptonaut, you’re going to come up against KYCs. Anytime you sign up to a new exchange you’re likely to have to provide some degree of personal information. With proper understanding and preparation, this shouldn’t be a problem, but a rushed, uninformed job leads down a highly frustrating path.

FAQs

What is AML for Crypto?

AML stands for Anti-Money Laundering. In crypto, AML regulations refer to laws designed to prevent and detect illegal activities related to money laundering and terrorist financing.

Do crypto wallets need KYC?

No, cryptocurrency wallets themselves generally do not require KYC verification. However, you may encounter KYC requirements when interacting with cryptocurrency exchanges or other service providers, especially if you want to make fiat deposits and withdrawals, engage in trading, or participate in token sales.

What are the typical requirements for completing KYC on a cryptocurrency exchange?

It totally depends on the provider, but typical requirements include personal information (name, DoB), government-issued identification, proof of address (e.g. a bill or a bank statement), selfie verification (often biometric), and source of funds information (e.g. your income, your employment). Few exchanges are strict enough to require all of these, but expect at least a combination of a few when you sign up.

Read more on DailyCoin: https://dailycoin.com/kyc-crypto-real-reason-exchanges-need-your-id/