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- Compliance with rules acts as green lights for South Korea for regulation of virtual assets, but might be threatening local industry with overbearing transfer limitations among exchanges.
- A source from a centralized domestic exchange today praised this regulatory measure as a move forward nation’s cryptocurrency industry.
- These rules might hit DeFi traders the hardest as they depend on private wallets to make trades.
Exchanges To Comply With Travel Rule
South Korean cryptocurrency exchanges have reached government mandate deadline to get into compliance with so-called Travel Rule, but not every sector player is happy with such a measure.
Commencing today, Korean exchanges will flag any cryptocurrency transactions worth over roughly $821. Transactions exceeding such amount will be limited to user validated wallets and a chosen number of exchanges which have accepted their anti-money laundering network.
This Travel Rule is a cluster of guidelines by global financial watchdog FATF (Financial Action Task Force) modeled to assist authorities trace movement of digital assets among VASPs (Virtual Asset Service Providers) like cryptocurrency exchanges or virtual asset issuers.
A source from a domestic centralized exchange pat on back of regulatory measure as a move ahead for nation’s cryptocurrency sector. It told a news website that, sector is doing a forward march towards institutional acceptance and will work more for mass adoption.
There might be issues for South Korean traders, whom hit and tally reached $45.8 Billion in cryptocurrency market value previous year, in figuring out which digital asset exchanges they can mobilize funds to and from.
Among top 4 exchanges (Korbit, Coinone, Bithumb, Upbit), there are a couple of Travel Rule systems. Every system will operate distinctly and needs global exchanges to follow its guidelines. If not followed, transactions won’t be allowed.
Annoying and Confusing Times Ahead
As per Sim Kim, CEO of VC Hashed based in South Korea, these dissimilarities are likely to create frustration and confusion among local traders. He believes that Korean cryptocurrency community thinks of mandates as “clearly over-regulation.”
He stated to a news agency, Hashed Web3, and cryptocurrency portfolio involves blockchain ecosystem Klaytn as well as Ethereum, Axie Infinity, and Dex dYdX.
Upbit is the biggest exchange in nation, with more than 78.3% of exchange market share as per a domestic researcher. It has adopted a homegrown Verify Virtual Asset Service Providers program.
At present, Upbit enables transactions to and from its associates in Thailand, Singapore, and Indonesia, which involves, HARU Invest, FTX US, BitMEX, Kraken, Gate.io, Bitbank(dot)cc, Bittrex, BITFRONT, Coinbase, Crypto(dot)com, OkCoin, Bybit, Binance, Aphrobit, Flat Thai Exchange, Cashierist, Gopax, and Bblock.
Meanwhile, Bithumb, Coinone, and Korbit, everyone have adopted CODE mechanism. This enables transactions among Binance, Bitfront, Line bitmax, Bitbank, Phemax, Coinlist Pro, Gemini, Bybit, bitFlyer, Coincheck, Kraken, Coinbase.
Local transactions are ceased until 8th April.
These rules might be significant obstacles, especially for deFi traders, as they are dependent on private wallets to make trades. Among all digital asset exchanges, no transaction from and to personal wallets will be enabled unless user validates address in person.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
