Coinpia Stops Crypto-Trading and Fiat Deposits
Coinpia, a South Korean cryptocurrency exchange, has halted trading and fiat deposits on its platform. The reason for this is that the South Korean government recently introduced new rules pertaining to user identification and KYC guidelines (Know Your Customer). Currently, Coinpia and its trading platform are not in compliance with these updated regulations and will, therefore, have to keep its services suspended until it can figure out how to properly adhere to these new requirements.
Basically, KYC outlines the process which businesses must follow in order to properly verify the identity of their clients. Generally speaking, KYC processes also cover anti-money laundering regulations and the legal obligations that banks have when they are dealing with a business. Since Coinpia will have to upgrade its trading platform in order to follow the new user verification procedures, the exchange announced on its website that it would not be accepting fiat currency, effective 30th of January. Per the South Korean exchange, its decision to suspend services was so that it would not violate the new guidelines provided by the country’s Financial Services Commission (FSC).
FSC Bans Anonymous Crypto-Trading
As most crypto watchers are aware, South Korea’s FSC stated that it would ban anonymous cryptocurrency accounts effective February 2018. Therefore, all crypto traders and investors are now required by Korean law to provide their real name and the relevant details regarding their bank accounts. Due to these new requirements, Coinpia reported that it was having a tough time while trying to incorporate a proper user identification system into its existing crypto-trading platform.
Notably, Coinpia was fined a few weeks ago because it failed to comply with the Information and Communication Network Act and Privacy Act. According to the South Korean Communications Commission, Coinpia had implemented “extremely poor security measures“. For instance, the Commission pointed out that the way passwords were stored and overall protection users had while accessing the exchange’s services was not up to standards. Coinpia was not the only crypto-exchange that was fined and accused of insufficient security measures. A total of 8 South Korean exchanges were targeted, including Youbit, Coinone, and Yapian.
Struggling to Keep Up With New Regulations
Presently, only three Korean banks offer services that comply with the new crypto regulations passed by the FSC. Moreover, only four crypto-exchanges out of 25 total have been able to set up a proper user identification system. The Yonhap news outlet explained, “New accounts are issued only to those exchanges that meet certain requirements. If they do not correspond to them, they may be denied installation of the user identification system”.
As the crypto-market continues to mature, crypto-related businesses will have to make sure they are operating in a legal manner. Trying to regulate and develop a fair legal framework for cryptocurrencies can be challenging, because the underlying technology is still fairly new and constantly evolving. In order to gain the trust of their customers, crypto-related companies should strive to offer the best services while ensuring the privacy and security of their clients. To its credit, Coinpia did the right thing by suspending services. Once the company can integrate a compliant user identification system onto its existing platform, more crypto-traders will feel confident bringing their business to their crypto-trading portal.