South Korean crypto exchanges met the deadline set by the government to comply with the so-called Travel Rule. However, not all industry players are happy with this measure.
All crypto transfers exceeding $821 will be flagged by Korean exchanges starting today. Users-verified wallets will only be able to transfer more than $821, and only a few exchanges have adopted their anti money laundering system.
The International Financial Watchdog Financial Action Task Force (FATF), has issued the Travel Rule. It is a set guidelines that allows authorities to track the movement and transfer of virtual assets between virtual service providers (VASP), such as digital asset issuers or crypto exchanges.
Cointelegraph was told today by a source at a local central exchange that the regulatory move was a positive step for the country’s cryptocurrency industry.
“The industry is making a move towards institutional acceptance, and will work harder to achieve mass adoption.”
South Korea’s crypto traders may have a problem figuring out which exchanges to transfer funds to. They have racked up $45.8billion in crypto market value by 2021. There are two Travel Rule Systems among the four major exchanges Upbit, Bithumb and Coinone. Each system operates in a different way and international exchanges must follow its guidelines. Transfers will be denied if these guidelines are not observed.
These differences, according to Simon Kim, CEO of South Korean crypto VC Hashed and likely to cause confusion among domestic traders. According to him, the mandate is seen by the Korean crypto community as “clearly too-regulated,” and he stressed this to Cointelegraph:
“In a state that the infrastructure was not ready, a regulatory body lacking low understanding was forced forward.” The Korean community will likely criticize the revisions.
Jun Hyuk Ahn, a local analyst, said that Upbit holds 78.3% market share and is the country’s largest exchange. It adopted the Verify VASP program, which it developed in-house. Upbit now allows transfers from and to its affiliates in Singapore and Indonesia.
Coinone, Korbit, Bithumb and Korbit have all adopted the CODE system. This allows transfers between Coinbase and Kraken, Coincheck. bitFlyer. Bybit, Gemini. Coinlist Pro. Phemex. Bitbank. Line bitmax. Bitfront. FTX. Binance.
Domestic transfers are not allowed until April 8.
Related: Bank of England, regulators evaluate crypto regulation in a raft of new documents
Decentralized finance (DeFi), traders who rely on personal wallets for trades, may be most affected by the new rules. Transfers to and from private wallets are not allowed on any exchanges unless the user verifies it in-person.