South Korea’s 4 Biggest Crypto Exchanges to Adopt FATF’s Travel Rule
The “big four” South Korean crypto exchanges have signed a Memorandum of Understanding (MOU) deal that will see them jointly implement the Financial Action Task Force (FATF)’s Travel Rule.
The group of exchanges, which comprises the market-leading Upbit and Bithumb, as well as Korbit and Coinbit, are all thought to be on course to beat a September 24 deadline to obtain regulatory approval from the Financial Services Commission (FSC), which will conduct spot-checks of trading platforms in the coming weeks.
The Travel Rule essentially means that crypto trading platforms must share transaction identifying information with one another, and with financial institutions and obliged entities – and must be able to guarantee the accuracy of the data they share with one other. Data such as national security or identity numbers must be shared, along with customers’ and recipients’ real names, in a measure designed to remove anonymity and reduce the risk of money laundering.
The four exchanges, per KBS, will look to launch their Travel Rule compliance solutions before the year is out.
“This is just another example of the big four’s exceptionalism,” a senior official at a rival trading platform told Cryptonews.com. The official, who asked not to be named and for the name of their exchange to be withheld, added:
“They are trying to show that they are going above and beyond in order to impress the FSC.”
Meanwhile, regulators are also busy, and have vowed to “crack down” on “fake accounts” at crypto exchanges. A number of (mainly smaller) South Korean exchanges allow customers to use so-called “hive” or “honeycomb” accounts, designed to obscure or conceal the identity of their users. Seoul has vowed to stamp this out, and has ruled that all crypto traders will have to make use of real name-verified wallets linked to commercial, domestic bank accounts as of September 24.
Per EDaily and Asia Kyungjae, the FSC has briefed financial institutions on the dangers of such accounts, and the steps they could take to stamp them out. The regulator has also built a “risk management system for cryptoasset business operators” that will allow it to “continuously investigate fake accounts” and request that financial sector companies “take countermeasures” when they identify such accounts.
Financial companies will be given the power to suspend transactions they believe are connected to “fake accounts.”
And South Korean banks are also set to examine exchanges’ coin listing policies as part of their risk assessment tests, Yonhap reported. Banks have been told to conduct risk management checks on crypto exchange partners before agreeing six-month real name banking deals.