South Korean cryptocurrency exchange Upbit announced restrictions for users who did not complete verification, with service subsequently being discontinued.
From 6 October 2021, clients without a real-name bank account will be unable to withdraw fiat funds or trade in won-denominated pairs. For those in the process of verification, the limit will be 1 million won (~$848) per trade.
Users with real-name accounts must hold them at the partner bank, K-Bank.
From 13 October, Upbit will suspend deposits, trading and withdrawals for unverified clients. After completing identity verification through the bank, the exchange will resume service.
All new users after 6 September will be able to perform any operations only if they hold real-name accounts.
Upbit received regulatory approval first among South Korean exchanges. On 20 August the company submitted a compliance report with the FATF to the Financial Services Commission (FSC).
The regulator set the deadline for document submission at 24 September. Local experts suggested that, due to FSC requirements, roughly 40 out of more than 60 exchanges in the country would close.
According to the media, 37 of 66 local crypto-trading platforms filed registration documents. Experts suggested that the vast majority would be unable to meet the new rules. With the exception of the big four — Upbit, Bithumb, Coinone and Korbit — platforms failed to establish relationships with banks for the use of real-name accounts, they noted.
In March 2020, the Korean parliament passed amendments to the law obliging bitcoin exchanges to comply with financial reporting requirements, the KYC rules and information-security standards.
In the first quarter of 2021, banks in the country processed transactions on verified accounts connected with crypto exchanges, totaling 64.2 trillion won (~$57.9 billion). The volume exceeded the figure for all of 2020.