South Korean Crypto Exchange to Follow Coinone in Verifying Private Wallets

Major South Korean cryptocurrency exchanges including Upbit, Bithumb and Korbit will follow Coinone's lead by banning transfers to unverified wallets, industry analysts said.

Coinone announced yesterday that starting January 24, it will reject deposits from unverified private wallets to reduce the risk of money laundering. All South Korean exchanges, including Upbit, Bithumb, Korbit, and 20 others, are expected to implement similar or identical measures to Coinone on or before March 25. The South Korean government has set deadlines for exchanges to accurately track transactions on and off the platform.

Korean blockchain industry analyst Jun Hyuk Ahn told Cointelegraph, “Korean exchanges are creating their own travel rule solutions to meet the requirements for post-March operations.”

“All exchanges in South Korea will have to use some of the travel rule system by March because the government has set a deadline for them. Coinone is just the first to do so.”

Exchange rules will also help the Far East country comply with the Financial Action Task Force (FATF) "travel rule".

According to anti-money laundering compliance service Sygna, the travel rule requires governments to “ensure domestic exchanges share true identity information with their counterparties, or face additional AML/CFT regulation.”

These exchange-specific compliance rules are part of a series of regulatory restrictions on cryptocurrency exchanges, starting with requiring all users to use real-name bank accounts. Before the rules were implemented in 2018, cryptocurrency exchange accounts could be linked to multiple bank accounts owned by individuals.

By September 2021, exchanges are required to conduct Internet Security Management System (ISMS) verification and a domestic bank partner that issues real-name accounts. All exchanges that do not meet the requirements will be forced to cancel the Korean won trading pairs or suspend services.

The country has also been grappling with global FATF compliance issues related to non-fungible tokens (NFTs). Financial regulators have been vacillating on the direction of NFT policy until South Korea’s Financial Services Commission said in its latest statement on Nov. 24 that it would explore options for regulating and taxing NFTs.

Globally, Korean exchanges are outliers following this rule. So far, no other large crypto spot exchange has required users to verify their private wallets.

Cointelegraph Chinese is a blockchain news information platform, and the information provided only represents the author's personal opinion, has nothing to do with the position of the Cointelegraph Chinese platform, and does not constitute any investment and financial advice. Readers are requested to establish correct currency concepts and investment concepts, and earnestly raise risk awareness.