South Korean crypto exchanges have reached the government-mandated deadline to comply with the so-called Travel Rule, but not all industry players are satisfied with the move.
Starting Today, Korean Exchanges Will Flag Any Crypto transfers is worth more than approximately $821. Transfers above that value will be restricted to user-verified wallets and a select number of exchanges that have adopted their anti-money laundering system.
The Travel Rule is a set of guidelines issued by the international financial watchdog Financial Action Task Force (FATF) designed to help authorities track the movement of virtual assets between Virtual Asset Service Providers (VASPs), such as cryptocurrency exchanges or digital asset issuers.
A source from a local centralized exchange today hailed the regulatory move as a step forward for the country’s crypto industry, telling Cointelegraph that:
“The industry is now taking a step towards institutional acceptance and will work harder for mass adoption.”
There may be a problem for South Korean merchants, who amassed $45.8 billion in crypto market value in 2021, to determine which exchanges they can transfer funds to and from. Among the four big exchanges (Upbit, Bithumb, Coinone, and Korbit), there are two travel rule systems. Each system works slightly differently and requires international exchanges to follow their guidelines. If those guidelines are not followed, transfers will not be allowed.
According to South Korea-based Crypto VC Hashed CEO Simon Kim, these differences are likely to cause confusion and frustration among domestic traders. He feels that the Korean crypto community views the mandate as “clearly over-regulating”, as he emphasized to Cointelegraph that:
“In a state where the infrastructure was not ready, a regulatory body with little understanding was forced to move forward. The reviews are expected to reach an appropriate level with criticism from the Korean community.”
Hashed and Web3 cryptography briefcase it includes the Klaytn and Ethereum blockchain ecosystems, the Axie Infinity NFT game, and the dYdX decentralized exchange.
Upbit is the largest exchange in the country with more than 78.3% of the exchange market share according to local analyst Jun Hyuk Ahn. Has adopted their homegrown Verify VASP Program. Starting today, Upbit allows transfers to and from its subsidiaries in Singapore, Indonesia and 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.
Meanwhile, Bithumb, Korbit and Coinone have adopted the CODE system. This allows transfers between Coinbase, Kraken, Coincheck, bitFlyer, Bybit, Gemini, Coinlist Pro, Phemex, Bitbank, Line bitmax, Bitfront, FTX, Binance.
Domestic transfers are blocked until April 8.
Rules can affect decentralized finance (DeFi) merchants are the most difficult, as they rely on personal wallets to transact. Among all exchanges, no transfers to or from private wallets will be allowed unless the user verifies the address in person.