In a significant move to enhance security and reduce financial crime risks, one of South Korea's largest cryptocurrency exchanges, Bithumb, has announced the gradual reduction of withdrawal limits for non-verified accounts. This policy aims to align with regulatory expectations and protect users from potential threats.
Understanding Bithumb’s New Policy
Background and Implementation Timeline
The decision follows earlier reports by local media, including MTN, indicating that the new withdrawal restrictions will take effect starting June 4. This initiative is part of a broader effort to strengthen account verification processes, particularly for foreign users, and to restrict transactions from high-risk jurisdictions such as North Korea, Iran, and Iraq.
Since the end of January, South Korean regulators have required all cryptocurrency trading accounts to adopt real-name verification. However, compliance has remained low. By early May, only about 30% of users had switched to real-name authenticated accounts. Despite this, non-verified accounts continue to operate within the country’s crypto trading ecosystem.
Current and Upcoming Withdrawal Limits
According to industry reports, approximately 60% of Bithumb’s customers have not completed real-name authentication. Under the current system, the exchange allows a daily withdrawal limit of 50 million KRW (approximately $46,465) and a monthly cap of 300 million KRW (around $278,753).
Starting next month, unverified accounts will see their daily withdrawal limit reduced to 45 million KRW (about $41,795). Although Bithumb has not specified the final limit, a company representative stated that the adjustments would be gradual, reflecting concerns about users becoming targets for financial crimes.
Bithumb’s Security Enhancements
Advanced Financial Information Security Systems
In addition to revising withdrawal policies, Bithumb announced this Monday that it has established a highly advanced financial information security framework, including dedicated personnel and budget allocations. The exchange claims to be the first in the industry to fully comply with all clauses of the Electronic Banking Regulation Rule 5-5-7.
This regulation recommends that financial institutions allocate:
- 5% of their total workforce to IT experts,
- 5% to information security specialists, and
- 7% of the total budget to privacy protection.
Bithumb’s disclosure revealed that, as of May 2018:
- IT staff constituted 21% of its total employees,
- information security personnel accounted for 5%, and
- 8% of its annual budget was dedicated to data protection activities.
These measures demonstrate the exchange’s commitment to safeguarding user assets and maintaining regulatory compliance.
The Rationale Behind Stricter Regulations
South Korea has emerged as a major hub for cryptocurrency trading, attracting both domestic and international investors. However, the rapid growth of the digital asset market has also increased vulnerabilities to fraud, money laundering, and other illicit activities.
Regulators and exchanges are now collaborating to create a safer environment. Real-name verification helps ensure accountability and transparency, making it harder for malicious actors to exploit the system. While some users may find the new rules inconvenient, they are designed to foster long-term trust and stability in the crypto ecosystem.
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Frequently Asked Questions
Why is Bithumb reducing withdrawal limits for unverified accounts?
Bithumb aims to mitigate financial crime risks by encouraging users to complete real-name verification. Lower limits reduce the potential damage from unauthorized or fraudulent transactions.
How will the new limits affect current users?
Users with unverified accounts will experience gradually decreasing withdrawal allowances. Verified accounts maintain higher limits, offering greater flexibility and security.
What is real-name verification, and why is it important?
Real-name verification links a user’s trading account to their official identity documentation. This process enhances security, prevents fake accounts, and aligns with anti-money laundering (AML) standards.
Which countries are restricted from using Bithumb?
The exchange blocks users from several high-risk regions, including North Korea, Iran, and Iraq, in compliance with international sanctions and security protocols.
How can users verify their accounts?
Users typically need to provide government-issued ID and proof of residence. The process may vary based on nationality and local regulations.
Are other exchanges implementing similar measures?
Many global exchanges are strengthening KYC (Know Your Customer) and AML policies to meet regulatory demands and enhance user protection.
Conclusion
Bithumb’s new withdrawal limits underscore the industry’s shift toward tighter security and regulatory compliance. While these changes may require adjustments from users, they ultimately contribute to a safer and more sustainable cryptocurrency market. Staying informed and adhering to verification processes will help traders and investors navigate this evolving landscape confidently.