South Korean Crypto Exchanges To Follow Coinone in Banning Unverified Wallets

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On Decem­ber 29th, South Kore­an-based cryp­to exchange Coinone announced plans to ban all unver­i­fied 3rd par­ty wal­let address­es. Accord­ing to sev­er­al reports, this is to com­ply with gov­ern­ment and FATF guide­lines. Accord­ing to reports, the rest of over 20 South Korea-based cryp­to exchanges must fol­low a sim­i­lar course by March 25th, 2022. South Korea’s inter­est in cryp­to is slow­ly lead­ing to a rise in a prop­er legal framework. 

Coinone to Ban Unverified 3rd Party Addresses

On Mon­day 29th, Coinone announced plans to start ver­i­fy­ing 3rd par­ty cryp­to wal­let address­es. Accord­ing to them, they intend to adhere to the gov­ern­ment direc­tives and FATF guide­lines to curb mon­ey laundering. 

Coinone announced that the process would start as ear­ly as Decem­ber 30th and run till Jan­u­ary 23rd. Imme­di­ate­ly on the 24th, Coinone exchange will not accept any trades con­nect­ed to unver­i­fied cryp­to wal­let address­es. They will ban any address­es not ver­i­fied by 23rd January. 

Accord­ing to sev­er­al sources, this new rule will affect online and hard­ware wal­let hold­ers like Ledger. Any­one who does not want to ver­i­fy their wal­lets can just with­draw their funds as ear­ly as now. 

Coinone is just the first of the many cryp­to exchanges which will do the same in the next few months. Accord­ing to mul­ti­ple sources, over 20 oth­er cryp­to exchanges, includ­ing Kor­bit, Bithumb, and Upbit, are expect­ed to fol­low a sim­i­lar course soon. 

All Exchanges Will Adhere to Government Directives

South Kore­an exchanges are expect­ed to ban unver­i­fied exchanges in adher­ence to gov­ern­ment guide­lines and direc­tives. Accord­ing to mul­ti­ple pub­li­ca­tions, the gov­ern­ment set March 25th 2022as the dead­line for ver­i­fy­ing wal­lets. After the dead­line, any unver­i­fied wal­lets will not deposit or with­draw funds. 

Jun Hyuk Ahn, a Kore­an Blockchain ana­lyst said:

“All the Kore­an exchanges are going to have to use some trav­el rule sys­tem by March because that’s when the gov­ern­ment has set a dead­line for them. Coinone just did it first.”

The gov­ern­ment direc­tive com­pelled local cryp­to exchanges to get real names, accounts, and ISMS ver­i­fi­ca­tion sys­tems for all cryp­to wal­lets. The ISMS ver­i­fi­ca­tion has been a require­ment since Sep­tem­ber 2021 in Korea. 

These reg­u­la­tions are designed to curb the issue of mon­ey laun­der­ing in the coun­try. Ear­li­er, the gov­ern­ment had tracked around 33 peo­ple who com­plet­ed ille­gal trans­ac­tions worth over $1.48 bil­lion.

If exchanges do not com­ply with the direc­tive, they will be banned from the coun­try. Hence, it’s much like­ly that all exchanges will do the same in the next few weeks. 

South Korea Crypto Regulations

Since ear­ly 2018, the Kore­an gov­ern­ment has been try­ing to find ways to reg­u­late cryp­to. How­ev­er, since ear­ly 2020, they have man­aged to design poli­cies that give space for cryp­to existence. 

For instance, the gov­ern­ment began work­ing with banks to mon­i­tor all cryp­to trans­ac­tions. The recent move on ban­ning unver­i­fied trans­ac­tions will go a long way in curb­ing mon­ey laundering. 

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