South Korea’s cryptocurrency exchanges have implemented changes to comply with the government’s mandates announced last week. In addition to restricting certain customers from trading cryptocurrencies, the exchanges have stopped issuing new virtual accounts in accordance with the regulators’ real-name requirements.
The South Korean government made several announcements in December regarding cryptocurrency regulation. The first was the “emergency” regulatory measures, as news.Bitcoin.com previously reported. Then a few additional rules followed.
The Korean crypto market is dominated by four exchanges; Bithumb, Upbit, Coinone, and Korbit. While Bithumb has long held the number one spot as the country’s largest crypto exchange by volume, newcomer Upbit started reporting higher 24-hour volumes in December. Upbit is backed by Kakao Corporation which owns the country’s most popular chat app, Kakao Talk.
Following the regulators’ announcements, the four exchanges began modifying their terms of service. Among other measures, they are prohibited from offering services to minors and non-Korean residents as well as from issuing new virtual accounts. These accounts were issued by banks for the exchanges to assign to their customers for anonymous KRW deposits and trading.
Minors and Non-Korean Residents
Upbit was the first exchange out of the four to post a notice regarding the discontinuation of its services for minors. Those under 19 years old can no longer use Upbit’s services and existing minor customers had until the end of last month to withdraw money from the platform. Its terms of service have been updated, changing from “under 14 years old to under 19 years old,” Upbit detailed.
A notice was also posted on the Bithumb website, suspending those under 19 years old from subscribing and using its services starting on January 1. The exchange has rephrased the wording in its terms of service from “If you are under 19 years of age, you may be restricted” to “you are restricted.” In addition, virtual accounts will be unavailable for “domestic non-residents.” An official of the exchange previously commented:
The latest measures won’t have much impact on us as we are already very careful with minors and foreign investors.
Coinone issued a similar notice, stating that trading is limited for “underaged-minors and non-Korean-residents,” clarifying that all of its services will no longer be available to them.
No New Virtual Bank Accounts
Bithumb explained on its website that the issuance of new virtual bank accounts has been suspended in accordance with the government’s regulation, which is a “requirement of real name verification for cryptocurrency transactions.”
Currently, Shinhan Bank and Nonghyup Bank provide Bithumb with virtual account services. The issuance of new Shinhan Bank virtual accounts was suspended on Friday and the issuance by Nonghyup Bank the following day.
Upbit also informed its users that “in order to comply with the government’s policy on self-certified accounts, the issuance of virtual accounts for Upbit new subscribers will cease from January 1, 2018.” However, existing members who already have virtual accounts “will be able to make all transactions without change,” the platform noted.
Similarly, Coinone wrote, “Virtual account issuing for cryptocurrency trading will be closed temporarily” beginning on December 29, 2017, in order “to apply Korean government’s policy for the real-name system.”
On the same day, another major exchange, Korbit, suspended the issuance of new virtual accounts. Citing that Shinhan Bank currently provides the exchange with virtual account services, Korbit noted:
If you already have a KRW [virtual] deposit account issued by Shinhan Bank, your KRW deposit or withdrawal requests will not be restricted. However, there may be an additional regulatory impact on KRW deposit or withdrawal requests [from the government] in the future.
The exchange added, “We will continue to work closely with the regulators and banking institutions to prepare a fully-compatible platform that safely processes KRW deposits and withdrawals in accordance with the new regulation.”