Major South Korean crypto exchanges including Upbit, Bithumb and Korbit will follow Coinone’s lead in banning transfers to unverified wallets., according to industry analysts.
Yesterday Coinone announced that it would reject unverified private wallet deposits as of January 24 to reduce the risk of money laundering. All Korean exchanges, including Upbit, Bithumb, Korbit, and 20 others, are expected to apply similar or identical measures to Coinone before March 25. The Korean government has set a deadline for exchanges to accurately track currency transactions on and off their platforms.
Korean blockchain industry analyst Jun Hyuk Ahn told Cointelegraph that “Korean exchanges are creating their own Travel Rules solutions to meet the requirements for trading after March.”
“All Korean exchanges are going to have to use some travel rule system for March because that is when the government has set a deadline for them. Coinone just did it first. “
The rule for exchanges will also help the Far Eastern nation comply with the Financial Action Task Force (FATF) “travel rule”.
According to the anti-money laundering (AML) compliance service Sygna, The travel rule stipulates that national governments must “ensure that national exchanges share real identity information with transmitting counterparties or face increased AML / CFT oversight.”
These compliance stipulations for exchanges are part of a long series of regulatory restrictions for cryptocurrency exchanges that began with the real-name bank account requirement for all users.. Before that rule was implemented in 2018, crypto exchange accounts could be linked to a bank account owned by multiple individuals.
By September 2021, exchanges had to have Internet Security Management System (ISMS) verification and a single national banking partner issuing real-name accounts. All exchanges that were unable to meet the requirements were forced to either withdraw the KRW pairs from trading or suspend services entirely.
The country has grappled with global FATF compliance issues related to non-fungible tokens (NFTs) as well.. Financial regulators have not followed suit regarding NFTs, until the latest statement from the Financial Services Commission stated on Nov. 24 that it would explore its options to regulate and tax NFTs.
Around the world, South Korean exchanges are the most atypical when it comes to compliance. For now, there are no other major cryptocurrency exchanges that require their users to verify their private wallets.
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