What is KYT in crypto? KYT stands for Know Your Transaction. It means using on-chain data to analyze where the funds in a transaction or address came from and where they are going, to determine whether they are linked to high-risk parties such as hackers, scammers, sanctioned entities or mixing services. For crypto businesses, KYT lets them see who is on the other side before receiving or sending funds, so they avoid taking in dirty money or paying high-risk addresses, and meet anti-money laundering requirements.
What Is the Difference Between KYT and KYC?
KYC and KYT differ in timing and focus: KYC verifies who a customer is at onboarding, while KYT checks the source and destination of funds every time an on-chain transaction happens. One covers people and the other covers money, so the two complement each other.
How Does KYT Work?
In short, KYT works by drawing on address label databases built up by providers and tracing funds along their paths to see whether a transaction is directly or indirectly linked to high-risk addresses, then producing a risk score. Because an address’s risk can change as new incidents come to light, screening is never a one-time task.
Where Do Crypto Businesses Need KYT?
The four points where crypto businesses need KYT most are before crediting incoming funds, before sending payments, when adding a new counterparty address, and in ongoing monitoring of funds already held.
How Do You Use KYT Results in the Transfer Flow?
KYT only delivers a risk judgment; it takes effect when the business builds it into its processes. A common approach is tiered handling by risk level: low-risk transactions pass automatically, medium-risk ones go to manual review, and high-risk ones are rejected or frozen. These rules work best when enforced before signing, together with the limits, whitelists and approvals in a policy engine, rather than checked after the transfer is done, because an on-chain transfer cannot be reversed once sent. Every screening result and decision should be recorded for compliance audits. Safeheron has partnered with Regtank to bring KYT and VASP regulatory status checks to self-custody.
Conclusion
By analyzing where on-chain funds come from and where they go, KYT helps businesses identify high-risk transactions before receiving or sending funds, making it an essential anti-money laundering tool alongside KYC. Combining screening results with pre-signing rules is what actually stops dirty money and high-risk payments. Safeheron’s Wallet-as-a-Service provides businesses with MPC key management and a policy engine.
Want to build on-chain risk screening into your business’s transfer flow? Contact Safeheron’s Sales Team to Book a 1:1 Demo
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