Bithumb crypto exchange will no longer accept withdrawals for unverified wallet addresses as the South Korean government has enforced a ‘travel rule’ on the cryptocurrency exchanges operating within the country. The announcement came from an official blog post published on Monday, January 24.
From January 27, Bithumb wouldn’t allow its customers to pre-register or withdraw coins using anonymous wallets such as MetaMask, which do not tie a name, number, or a registered email reported CoinDesk Korea.
The new regulation rule by the state’s Financial Action Task Force (FATF) requires exchanges to submit transactions when a platform exceeds a specific threshold.
Last week, Bithumb first claimed that users with such wallets would need to pass through a face-to-face interview to signup on the exchange. But, reversing course due to the pressure of Gov. Officials.
Coinone and Bithumb are the first two exchanges collecting customers’ information to provide an allowlist of users to authorities. At the same time, others companies have time to impose this policy till March 25.
Financial companies’ inclusion will help keep track of users transacting crypto in general sentiment. Furthermore, it will decrease illegal incidents as only the legit groups of people and companies would be allowed to enter the business.
How Does A Bank Partnership Impact On Bithumb Crypto Exchange?
The exchange faced pressure from its partner bank, Nonghyup Bank, to comply with a new FATF Travel Rule requiring financial institutions to identify senders and receivers of funds across borders. The design lets them know who you are when sending or receiving money abroad so they can keep an eye out for fraudsters.
The partner bank requested the exchange to block all wallets without KYC verification, including MyEtherWallet and MetaMask.
South Korean crypto exchanges offering trading pairs for the Won (KRW) must have a domestic partner bank to issue real-name accounts. Therefore, these banks can play an essential role in influencing exchange policies, like how Nonghyup Bank’s close relationship with Bithumb Coinone impacted their decision-making process on significant issues such as listing new coins or launching margin trading services.
The Korean government will require all crypto exchanges by March 25th to have personal wallets for users’ cryptocurrencies. As yet, there haven’t been any changes made at Upbit or Koribit regarding their policies on these types of transactions – although it seems likely that we’ll see news soon.
The Korean crypto market is primarily dominated by two exchanges, with Upbit handling 76% and Bithumb 13%.
The South Korean Government announced that they would be increasing AML/CTF monitoring by the Travel Rule. The action is necessary to combat money laundering and terrorism financing, so crypto exchanges should follow these new guidelines immediately.
Featured image from Pixabay, chart from TradingView.com