A few months ago, South Korean government introduced a regulation called “real-name system” for crypto exchanges. Investors have to convert their virtual crypto accounts into a real-name verified account. Without the conversion, investors are only allowed to withdraw.
The South Korean government plans for all crypto exchanges to use the real name system but in reality, only the country’s top four crypto exchanges UpBit, Bithumb, Coinone and Korbit have been able to offer the conversion services to their customers. To convert an existing virtual account, the trader has to open a bank account which has a real-name conversion agreement with the exchange. An example would be how Bithumb is working with Nonghyup Bank to provide such a service. To date, banks are only providing this service to the country’s top four exchanges mentioned above.
Money Today reported that “Although the name verification service has been in operation [for] more than half a year since its inception, the conversion rate to the real-name verified accounts for each exchange site is only 40 to 50%.
The real-name system ensures that customers deposits at crypt exchanges are matched with the information of their bank accounts. One reason for enforcing this system to limit potentially illegal activities such as money laundering.
However, the news outlet further adds that “that “many investors do not convert to a real-name verified account but invest only with the funds they have already deposited [at cryptoexchanges].”
The news outlet also elaborated that banks urge users to convert their virtual accounts to a real-name verified account because they will be limiting services by a certain date. If not done by the cut of date, some restrictions on the Korean won deposit/withdrawal will be considered. The publication added that restrictions are planned to be imposed as early as November this year.
Crypto exchanges are also doing their by to encourage conversion to real-name accounts. Bithumb has lowered the daily Korean won withdrawal limit by 10% for those accounts who have not converted. They are also planning to take additional measures to try and convert more users. Kakao-backed exchange Upbit held an event last month which gave away US$88,615 to users who converted their accounts during a specific period of time.
Sources: Money Today, Bitcoin.com
Image Credits: Reuters, ICOnow