The South Korean digital asset exchange – Bithumb – informed its users that they will no longer be able to execute crypto withdrawals to unverified private wallets from January 27. The company’s new policy will also require additional Know Your Customer (KYC) identity verification.
Bithumb Tightens Security
In a January 24 announcement, the cryptocurrency platform Bithumb disclosed it had changed its service policy, and the pre-registration function is temporarily suspended. As a result, users cannot sign in with a personal wallet, and the company will approve only verified ones.
“Addresses owned by domestic exchanges and personal wallet address registration will be rejected,” Bithumb notified.
All clients of the exchange should validate their wallets according to the new rules by January 27. The company added that users with unverified addresses can withdraw “in the same way as before” until the enforcement date.
Additionally, Bithumb will implement new KYC identity verification. Evidence image upload guide remains mandatory for everyone. At the same time, a simultaneous photograph of the deposit wallet address and ID card will be further required.
“We apologize for any inconvenience caused by the change of the withdrawal address pre-registration policy. Bithumb will always strive for convenient and safe transactions for our members,” the company said in conclusion.
At the end of 2021, Coinone – another major cryptocurrency exchange in South Korea – imposed similar legislation. Back then, the organization decided to discontinue withdrawals of digital assets to unverified external wallets. Coinone informed its clients that they should abide by the new rules by January 23, or otherwise it will halt unregistered addresses.
The Environment for Korean Exchanges
The Korean authorities have put local cryptocurrency trading venues under their scope last year and required them to register with the Financial Services Commission (FSC) until September 24, 2021.
The government asserted that if they continue operating without the necessary changes, they will be subject to penalties, including up to five years of imprisonment or a maximum fine of KRW50 million (around $42,000).
Shortly after that warning, 11 mid-sized digital asset exchanges in South Korea ceased their endeavors after the nation’s watchdog identified they operate their businesses illegally.
A few days before the deadline in September, more than 60 platforms said they could not meet up with the regulator’s requirements, and thus they would shut down.
In the aftermath, only 28 exchanges managed to obtain a green light from the FSC. Among them are the four biggest trading venues – Bithumb, Coinone, Korbit, and Upbit.