South Korea: Crypto-exchange Upbit to begin ID verification, others to follow suit

South Korean authorities have managed to implement the new regulations regarding cryptocurrency exchanges in the country. This move resulted in 29 out of 66 exchanges shutting shop, following the deadline of 24 September, 2021. However, the “big four” exchanges – Upbit, Bithumb, Coinone, and Korbit managed to meet the regulatory requirements and continue to function along with a few others.

As the norms were changing, Upbit, announced that it would require traders transacting above 1 million won to go through an identity verification process from 1 October, 2021. Users can avoid this verification process if they go through the know-your-customer (KYC) process, under which they will be requested to provide a photo of their ID card on the Upbit app. For transactions under 1 million won, verification will start from 8 October to prevent traffic overload.

Upbit had been the first exchange to get the green light from South Korean regulators and is now working towards further compliance. The exchange will be undertaking a massive verification process, in order to abide by the new, stricter, anti-money laundering regulations.

According to industry experts, this process could take three months as Upbit served a wide base of 8.4 million users. The exchange will be using a public ID verification system operated by the Ministry of the Interior and Safety for the same.

According to sources,

“Technically, it could take as little as seven days and up to 3 months. During the verification process, if congested, users may experience a server delay and might miss the timing of their transactions.”

Once this process begins, users will not be able to process transactions without identity verification. The exchange was awaiting official documents from financial regulators to start the process, however, there was a delay from the Financial Intelligence Unit that supervises the virtual asset industry.

As per reports,

“The verification is an important step for the virtual asset industry and regulators alike, according to the source, because the ID verification sets ground for the industry‘s upcoming challenges such as setting up a system for a global anti-money laundering standards called the ‘travel rule’ and capital gains taxes from 2022.”

The exchange has offered a grace period of one week to its customers, for the outstanding orders that have not been executed before 1 October. The orders that are not signed by 7 October, 2021, will be canceled the following day. The other big crypto exchanges may also have to follow the verification process to keep up with the new laws.