Value context and insight. lkm@koreatimes.co.kr
Korea's top crypto exchange to implement stringent ID checks
A man passes by the headquarters of UPbit in Seoul. Korea Times file
By Lee Kyung-min
By Lee Kyung-min
Upbit, a cryptocurrency exchange in Korea, will be rejecting won-based transactions of over 1 million won ($842), starting Wednesday, unless the users have verified their identities, according to Dunamu, operator of Upbit, Sunday.
Those who fail to undergo an ID check will be denied service altogether starting Oct. 13. Pending orders of 1 million won or less in volume submitted between Oct. 6 and 12 will be canceled.
The measure is part of the exchange's efforts to comply with a new regulation on digital assets by the Financial Services Commission (FSC), intended to enhance the transparency of the new investment vehicle in a market long been unbridled and volatile due to speculators.
“We will fulfill our customer identity confirmation requirement in accordance with the new law,” Dunamu said.
The requirement, whereby operators are to confirm the identity of users, purpose of transactions, source of funds and whether the accounts are borrowed, seeks to prevent fraud and money laundering.
The ID verification process can be completed on the Upbit app with a resident registration card, driver's license, or securities or bank account. Acceptable are bank and securities accounts from financial services firms other than K bank, the issuer of real-name accounts for Upbit users.
Suspended requests on crypto-trading and transfers made by users that have yet to undergo an ID check will be processed immediately once their identity is verified.
The Korea Financial Intelligence Unit (KoFIU) under the FSC said 33 exchange operators had submitted business operation requests as of Sept. 24. Only Upbit was cleared in KoFIU's review, with the results for the remaining exchanges to remain undecided for the next three months.
Operators of cryptocurrency exchanges without FSC authorization will be subject to prison term of up to five years and fine of up to 50 million won.
Upbit is the first among the so-called top four exchanges alongside Bithumb, Coinone and Korbit in obtaining the FSC authorization to operate the exchange.
The remaining three are expected to resume operations with strengthened rules intact, since they all have met regulatory requirements including obtaining certification from the Information Protection Management System (ISMS). They have teamed up with local commercial lenders that issue real-name accounts where coins are to be traded transparently.
They have informed their users about the new ID rule through notices on their webpages and apps to avoid confusion.
According to CoinMarketCap, a cryptocurrency information service provider, bitcoin traded for $47,899.27, as of Sunday 2 p.m. (KST), up 0.73 percent from 24 hours earlier and 13.45 percent from seven days earlier.