Compliance & Taxes Basics — Do It Right, Keep It Simple
Understand KYC/AML, travel rule at a glance, what may be taxable, and how to keep tidy records without oversharing your data. Finish with a printable documentation checklist.
- Know why exchanges require KYC/AML and what the travel rule implies for transfers.
- Recognize common taxable events and which data to keep for reports.
- Set up a simple records folder and export CSVs from wallets/exchanges.
- Apply operational privacy: avoid doxxing addresses and manage public vs private footprints.
7.1KYC/AML in plain English
Regulated exchanges use KYC/AML to prevent illicit finance and meet legal obligations.
KYC (Know Your Customer)
Identity verification to open and keep using services. Usually requires ID documents and selfie.
AML (Anti-Money Laundering)
Monitoring and reporting suspicious activity; withdrawal/deposit checks. Automated systems flag unusual patterns.
Travel Rule (simplified)
For certain transfers, providers may need to exchange sender/recipient info. Expect extra prompts for larger or cross-border transfers.
Sanctions & Blocked Jurisdictions
Services may restrict access or freeze transfers if sanctions screening flags risk. Some countries have limited access.
Right approach
- ✓Provide accurate KYC to trusted, regulated providers
- ✓Keep copies of what you submitted (offline, encrypted)
- ✓Use consistent, legal names across platforms
Wrong approach
- ✗Using fake IDs or borrowed identities
- ✗Hopping between shady services to bypass rules
- ✗Ignoring extra information requests (may result in frozen funds)
7.2Tax basics (orientation only, not advice)
Tax rules vary by country. Learn the patterns so you can keep the right data and talk to a professional if needed.
What may be taxable (examples, jurisdiction-agnostic)
(Always check local law)
Disposals
Selling crypto for fiat, swapping one crypto for another, spending crypto on goods/services
Income
Staking rewards, mining income, airdrops, referral payouts, salary in crypto
Non-events (often)
Self-transfers between your own wallets on the same chain (fees may still matter). Always verify local rules.
Records you typically need
- •Date/time (UTC)
- •Asset and amount
- •Fiat value at time of transaction
- •Fees (asset and fiat value)
- •From/to addresses
- •Transaction hash
- •Venue (exchange/wallet)
- •Short purpose note
Supporting documents
- •CSV exports from exchanges
- •Exchange statements
- •Invoices/receipts
- •Screenshots/PDF confirmations with redacted sensitive info
7.3Operational privacy tips (practical)
Blockchains are transparent. Good hygiene reduces unwanted linkage to your identity.
Don't reuse receive addresses when privacy matters
Enable 'new address' if wallet supports it (BTC, some others).
Separate wallets/labels: public activity vs private holdings
Avoid funding both from the same identifiable source.
Be careful with screenshots and sharing tx hashes publicly
Remove metadata and redact IDs before posting.
Verify domains of reporting tools
Avoid uploading full raw history to untrusted sites.
Keep KYC documents offline in encrypted storage
Maintain backups in a secure location.
Right approach
- ✓Dedicated labels per wallet purpose
- ✓Fresh receive addresses when privacy matters
- ✓Minimal public disclosure of wallet addresses
Wrong approach
- ✗Posting your main wallet address on social media
- ✗Mixing personal and business flows in one address
- ✗Sharing transaction hashes without considering the trail
7.4Practice: Export and organize your records
Task A: Export a CSV from an exchange
- 1Go to 'Reports/History/Exports' in your exchange account.
- 2Select full date range; include deposits, withdrawals, trades, and fees if separate.
- 3Export CSV; store it in your records folder (see structure below).
- 4Name pattern: exchange-name_YYYY-MM-DD.csv
Task B: Export from a wallet
- 1Open wallet activity; copy transaction history or export CSV if supported.
- 2Save a text file with key tx hashes if CSV is not available.
- 3Name pattern: wallet-name_chain_YYYY-MM-DD.txt
Task C: Create a simple folder structure
Tip: Set a monthly reminder to update exports. Keep backups in an encrypted drive. Do not store seeds or private keys in this folder.
7.5Deliverable: Documentation Checklist
This is your personal record-keeping checklist. Do not enter private keys, seeds, or passwords. Generated locally; nothing is sent anywhere.
Local save is off. Your checklist will reset when you leave this page. Enable to persist across sessions.
Identity and KYC
Transactions
Valuations
Income
Compliance hygiene
Professional help (optional)
Laws vary by jurisdiction. This checklist is educational and for organization only.
(Non-affiliated; verify domains yourself)
- •Your country's tax authority guidance pages on crypto
- •Your exchange's help center: CSV/reporting section
- •Reputable accounting/reporting tools (evaluate privacy policies before uploading data)
Compliance Notice
Educational content only, not legal or tax advice. Regulations change and vary by jurisdiction. Verify requirements with official sources or a qualified professional. Never upload private keys or seeds to any service. We never request or store your secrets.
7.6Quick Quiz
Mini-Quiz
Test your understanding with 6 questions. Pass with 4/6 correct.