The implementation of real-name verification across virtual asset platforms has led to a notable decline in cryptocurrency-related fraud, particularly since regulatory authorities began enforcing anti-money laundering (AML) compliance more rigorously. One year after the Financial Supervisory Commission (FSC) required 26 cryptocurrency platforms to submit formal AML compliance statements, on-site inspections and identity verification audits have become standard practice. These measures have not only improved platform accountability but also contributed to a sharp drop in online scam incidents—especially from July onward.
Despite initial concerns that stricter regulations might deter users, industry data shows that while customer numbers have naturally declined due to real-name requirements, the remaining user base consists of more legitimate, verified participants. This shift has strengthened trust in digital assets and maintained overall trading volume stability.
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How Real-Name Verification Works
Under current rules, individuals must present original identification documents and link a matching bank account to open an account on a regulated crypto platform. Both identity and financial information must align precisely—this dual verification system is often referred to as "dual real-name authentication."
Platforms also recommend users maintain a personal cryptocurrency wallet, with every transaction requiring identity confirmation before proceeding. This layered security approach ensures greater traceability and reduces opportunities for fraudulent activity.
Notably, credit card payments are still not permitted—even for verified users. All transactions must be conducted via cash or direct bank transfers, further minimizing risks associated with unauthorized spending or debt-fueled speculation.
Regulatory Enforcement Drives Change
While crypto platforms were technically required to implement real-name registration as early as 2018, enforcement remained inconsistent until the FSC began actively monitoring compliance under the Anti-Money Laundering Act. Now, platforms are obligated not only to verify identities but also to monitor transactions for suspicious behavior and take action when red flags arise.
This includes freezing accounts, restricting trading privileges, and reporting potential crimes to law enforcement agencies such as the Investigation Bureau’s Anti-Money Laundering Division. As a result, platforms have become proactive partners in financial crime prevention rather than passive intermediaries.
“Compliance isn’t just about ticking boxes—it’s about building a trustworthy ecosystem,” said a senior executive at a leading local crypto exchange. “We’re now able to identify and isolate high-risk accounts before they cause harm.”
Addressing Key Risks in Virtual Assets
The Investigation Bureau highlights three major challenges in regulating cryptocurrency:
- Anonymity risk – Without proper identification, bad actors can hide behind pseudonymous wallets.
- Insufficient KYC (Know Your Customer) – Weak onboarding processes enable fake or synthetic identities.
- Cross-border complexity – Digital assets can move quickly across jurisdictions, often involving multiple intermediaries and layered transactions.
These factors make virtual currencies attractive tools for money laundering and fraud—especially when paired with mechanisms like Bitcoin ATMs (BTMs), which recently gained notoriety after being exploited by scam syndicates.
However, with mandatory real-name policies now in place, BTM operators and exchanges alike must adhere to stricter oversight, reducing the likelihood of misuse.
Cleaning Up User Databases
Beyond fraud reduction, real-name verification has helped platforms streamline their customer databases by eliminating inactive or unverified accounts—commonly known as "dormant users" or "zombie accounts."
This cleanup enhances data accuracy and supports more effective, compliant marketing strategies. For example, platforms can now tailor educational campaigns to verified users based on actual transaction history and risk profiles, rather than relying on speculative outreach.
Additionally, having accurate user records strengthens cooperation with regulators during audits and investigations.
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FAQs: Understanding Real-Name Crypto Regulations
Q: Why do I need to provide my ID and bank account to use a crypto platform?
A: These requirements are part of global anti-money laundering standards. By verifying your identity and linking it to a legitimate financial account, platforms reduce the risk of fraud, scams, and illicit fund flows.
Q: Has real-name verification actually reduced scams?
A: Yes. Industry reports show a significant drop in reported fraud cases since July, especially in phishing attacks and fake investment schemes. With fewer anonymous accounts available for abuse, scammers have fewer avenues to exploit.
Q: Can I still trade anonymously on some platforms?
A: While decentralized exchanges (DEXs) may allow pseudonymous trading, regulated platforms operating within national jurisdictions must enforce KYC/AML rules. Using non-compliant services increases personal and legal risk.
Q: What happens if I don’t complete real-name verification?
A: You may face restrictions such as limited deposit/withdrawal capabilities, reduced trading limits, or eventual account suspension. Full access requires full compliance.
Q: Is my personal data safe once I submit it?
A: Reputable platforms use advanced encryption and strict access controls to protect user data. They are also subject to data privacy laws that mandate responsible handling of sensitive information.
Q: Will credit card purchases ever be allowed?
A: The FSC has not yet approved credit card funding due to concerns over debt-fueled speculation and chargeback fraud. For now, only cash-based transactions are permitted.
The Bigger Picture: Trust Through Transparency
The success of real-name verification in curbing crypto fraud underscores a broader trend: transparency builds trust. As more users engage with verified platforms, confidence in digital assets grows—even amid market volatility.
Moreover, this regulatory framework positions the region to align with international standards set by bodies like the Financial Action Task Force (FATF). Such alignment facilitates cross-border collaboration and opens doors for institutional investment.
Crypto is no longer the Wild West it was once perceived to be. With robust identity checks, active monitoring, and clear accountability, the ecosystem is maturing into a safer, more reliable space for everyday users.
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Conclusion
The rollout of mandatory real-name verification has proven transformative for the cryptocurrency industry. Far from driving users away, it has cleansed the market of bad actors, reduced fraud rates, and fostered greater trust among genuine investors. Combined with ongoing regulatory oversight and technological safeguards, these changes signal a new era of accountability—one where innovation thrives within a framework of security and integrity.
As global regulators continue refining their approaches, the lessons learned here offer a model for balancing openness with protection in the fast-evolving world of virtual assets.
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