A digital board shows prices of major cryptocurrencies bitcoin and ethereum on August 20 at Upbit‘s headquarters in Seoul. (Yonhap)
Upbit, South Korea’s first cryptocurrency exchange to receive a green light from regulators, is gearing up to verify its massive number of users to fulfill the next important duty under the anti-money laundry act.
Industry watchers believe Upbit’s user verification could take as long as three months due to its massive user base of 8.3 million and a public ID verification system operated by the Ministry of the Interior and Safety. The ministry’s identity verification system is known to process 3 to 15 verifications per second.
“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,” an industry source said on the condition of anonymity.
In an announcement, the exchange said once the user verification begins, users will not be able to process transactions without carrying out the verification.
Upbit will have to carry out user verification as soon as it receives official documents from the financial regulators but the Financial Intelligence Unit, which supervises the virtual asset industry, has been delaying its action until the largest crypto exchange gets ready for it to avoid any possible market uncertainty.
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.
Upbit received the FIU’s approval on Sept. 17, becoming the country’s first cryptocurrency exchange officially registered with the financial authorities.
By the deadline last Friday, 29 out of 66 crypto exchanges in the country submitted an application for registration in accordance with the revised Act on Reporting and Using Specified Financial Transaction Information, which imposes strict anti-money laundering measures on exchanges and effectively set legal boundaries for crypto exchanges that had operated in legal blind spots.