Major crypto exchange firms in South Korea prepping to follow Coinone concerning verification of private wallets
According to industry analyst reports, South Korea’s major crypto exchanges, including Upbit, Korbit and Bithumb, are to follow Coinone’s lead to ban transfers to non-verified wallets.
On December 29, Coinone announced that it would reject deposits henceforth, from unverified private wallets starting from January 24 as a measure to reduce the risk of money laundering. All Korean exchanges, including those above three with the addition of 20 others, are expected to be preparing for implementing similar or identical regulations as Coinone either by or before March 25, 2022.
The Korean government has set an official deadline in order for exchanges to keep tracking their coin transactions on and off the platforms accurately.
Korea’s blockchain industry analyst Jun Hyuk Ahn has said Cointelegraph in an interview that Korean exchanges are creating their own Travel Rule solutions for meeting the requirements to operate post-March.
The rule for exchanges would also assist the far eastern nation in complying with the Financial Action Task Force (FATF) “travel rule.”
According to anti-money laundering (AML) Compliance service Sygna, the travel rule stipulates all national governments to “ensure domestic exchanges share real-identity information with transmittal counterparties or face increased AML/CFT monitoring.”
The compliance stipulations for exchanges are part of a long-term series of regulatory restrictions for crypto exchanges that had started with the real-name bank account requirement for all users. Before that rule had been implemented in 2018, crypto exchange accounts could be linked to a bank account that could be owned by multiple individuals.
By September 2021, exchanges had been mandated to have Internet Security Management System (ISMS) verification along with a single domestic bank partner that could issue real-name accounts. All exchanges that failed to meet the requirements had eventually been forced to remove KRW pairs from trading or suspend from services altogether.
The country has been grappling with global FATF compliance issues related to nonfungible tokens (NFT) too. Financial regulators had flip-flopped on their policy direction regarding NFTs until the latest statement was issued on November 24 by the Financial Services Commission stating that it would explore its options in both regulating and taxing NFTs.
Internationally, South Korea’s exchanges are the outliers concerning compliance with the rule. As of now, there have been no other major crypto spot exchanges that require users to verify their private wallets.