South Korean cryptocurrency exchanges have met a government deadline to comply with the so-called travel rule, but not all industry players are happy with the measure.
Starting today, South Korean exchanges will flag any cryptocurrency transfers worth more than roughly $821. Transfers above this value will be restricted to user-verified wallets and a selected number of exchanges that have adopted their anti-money laundering systems.
The Travel Rule is a set of guidelines issued by the Financial Action Task Force (FATF), an international financial watchdog, to help authorities track exchanges between virtual asset service providers (VASPs), such as cryptocurrency exchanges or digital asset issuers. flow of virtual assets.
Today, a source from a local centralized exchange hailed the regulatory measures as a step forward for the South Korean crypto industry, telling Cointelegraph:
"The industry is now taking a step toward institutional acceptance and will work harder to achieve mass adoption."
South Korean traders, whose crypto market is worth $45.8 billion in 2021, may have problems figuring out which exchanges they can move funds between. Among the four major exchanges (Upbit, Bithumb, Coinone, and Korbit), there are two travel rule systems. Each system functions slightly differently and requires international communication to follow its guidelines. If these guidelines are not followed, transfers will not be permitted if these guidelines are not followed.
According to Simon Kim, CEO of Korean cryptocurrency VC Hashed, these discrepancies could cause confusion and frustration among domestic traders. He believes the South Korean crypto community sees this as “obvious over-regulation,” emphasizing to Cointelegraph:
“A poorly informed regulator is forced to move forward in a state where the infrastructure is not ready. Expect revisions to reach an appropriate level amid criticism from the Korean community.”
The cryptocurrency and Web3 portfolio includes blockchain ecosystems Klaytn and Ethereum, NFT game Axi Infinity and decentralized exchange dYdX.
According to local analyst Jun Hyuk Ahn, Upbit is the largest exchange in the country with over 78.3% exchange market share. It uses a self-developed verification VASP program. As of today, Upbit allows exchanges between its affiliates in Singapore, Indonesia and Thailand, Thailand, Bblock, Gopax, Cashierest, Flat Thai Exchange, Aphrobit, Binance, Bybit, Okcoin, Crypto.com, Coinbase, BITFRONT, Bittrex, Bitbank.cc , Gate.io, Kraken, BitMEX, FTX US, and HARU Invest for transfers.
At the same time, Bithumb, Korbit, and Coinone have all adopted the CODE system. This allows transfers between Coinbase, Kraken, Coincheck, bitFlyer, Bybit, Gemini, Coinlist Pro, Phemex, Bitbank, Line bitmax, Bitfront, FTX, Binance.
The deadline for domestic transfers is April 8.
The regulations are likely to hit decentralized finance (DeFi) traders the hardest, as they rely on personal wallets for transactions. On all exchanges, transfers to and from private wallets are not allowed unless the user personally verifies the address.
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