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- The four major cryptocurrency exchanges in South Korea have decided to form a joint venture to combat money laundering
- The four exchange heads — Upbit, Bithumb, Coinone, and Korbit — met Tuesday and signed a memorandum to form the joint venture
- Virtual asset service providers must share the identities of users involved in virtual asset transfers worth more than 1 million won ($884) under the rule
Four of South Korea’s largest cryptocurrency exchanges have teamed up to form a joint venture to combat money laundering. Bithumb, Korbit, Coinone, and Upbit’s leaders signed a memorandum to create a system that will allow them to follow the travel rule. The four exchanges’ CEOs — Upbit, Bithumb, Coinone, and Korbit — met Tuesday and signed a memorandum to form the joint venture, which will develop a system to help them comply with the travel rule.
Observing the travel restriction
The travel rule is a global standard imposed on virtual asset service providers such as digital wallet providers and crypto exchanges by the Financial Action Task Force, an intergovernmental anti-money laundering watchdog. As per the announcement, the rule requires virtual asset service providers to share the identities of users involved in virtual asset transfers worth more than 1 million won($884).
The regulation is expected to function similarly to a SWIFT code, which is widely used in traditional financial institutions as the industry standard. South Korea’s cryptocurrency law, known as the Act on Reporting and Using Specified Financial Transaction Information, lays out this rule. The four cryptocurrency exchanges said they decided to band together to save time and money as the international regulation’s grace period expires on March 25, 2022.
The goal of the joint venture is to save money
Instead of developing their own systems, the four companies decided to collaborate on a system that can be used across the industry, according to the joint statement. South Korea has made a name for itself in the cryptocurrency world. Out of 1,750 people, 23.6 percent of South Korean college students were investing in cryptocurrencies, according to a recent study by Alba Heaven, an information provider.
Based on their global crypto craze experience, these students were inclined to invest in this territory, according to the survey. Other reasons for investing in crypto include high investment returns, low entry barriers, and the opportunity to overcome class hierarchy, according to the respondents.
The four cryptocurrency exchanges involved in the joint venture are the only virtual asset exchanges that have formed partnerships with local banks to register real-name accounts under the new law. Others are having trouble forming relationships with local lenders, who are wary of the risks associated with the volatile cryptocurrency market.
Despite growing investor concerns that the tax plan would be delayed, the South Korean government announced last month that it would not give up on its plan to levy a 20% income tax on capital gains from crypto transactions in 2022.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
