South Korean cryptocurrency exchanges have reached the government-set deadline to comply with the so-called travel rule, but not all industry players are happy with the measure.
From Friday, Korean exchanges will announce any crypto transfers over $821. Transfers above this value will be limited to wallets that have been verified by the user, with a limited number of exchanges using the Anti-Money Laundering (AML) system.
The route is a set of guidelines issued by the International Financial Action Task Force (FATF) to help governments track the movement of virtual assets between virtual asset service providers (VASPs), such as cryptocurrency exchanges or digital asset issuers.
Today, a source from the local central exchange hailed the regulators’ move as a step forward for the country’s cryptocurrency industry, telling Cointelegraph that:
“The industry is currently taking a step towards institutional recognition and will work even harder for mass adoption.”
This could be a problem for South Korean traders, who have raised $45.9 billion in crypto market capitalization in 2021, to see which exchanges they can transfer money to. Among the four major exchanges, Upbit, Bithumb, Coinone and Korbit, there are two Travel Rule platforms. Each system works a little differently and requires international exchanges to follow instructions. If these instructions are not followed, transfers will not be allowed.
According to Simon Kim Kim, CEO of South Korean Cryptocurrency Hashed, these differences can cause confusion and frustration among local traders. He believes that the authorization is viewed by the Korean crypto community as “clearly over-regulating” as he assured Cointelegraph that:
“In a situation where the infrastructure was not prepared, an obscure regulator was forced to move forward. Appropriate scrutiny of Korean society is expected to follow.”
Hashed and Web3 cryptocurrency wallets include the Klaytn blockchain ecosystem, Ethereum, the Axie Infinity NFT game, and the dYdX decentralized exchange.
Upbit is the country’s largest stock exchange, accounting for more than 78.3% of the stock market, according to local analyst Jun Hyuk An. He implemented his own Verify VASP. Starting Friday, Upbit is allowing transfers to and from branches in Singapore, Indonesia, and Thailand, Bblock, GOPAX, Cashierest, Flat Thai Exchange, Aphrobit, Binance, Bybit, Okcoin, Crypto.com, Coinbase, BITFRONT, Bittrex, Bitbank, Gate. io, Kraken, BitMEX, FTX US and Haru Invest.
Meanwhile, Bithumb, Korbit, and Coinone have implemented the CODE system. This allows transfers between Coinbase, Kraken, Coincheck, bitFlyer, Bybit, Gemini, Coinlist Pro, Phemex, Bitbank, Line bitmax, Bitfront, FTX and Binance.
Internal transfers are prohibited until April 8.
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The rules may hit decentralized finance (DeFi) traders the hardest because they rely on personal wallets to conduct trades. Among all exchanges, transfers to or from private wallets are prohibited unless the user personally confirms the address.