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South Korean Exchanges To Ban Transfers To Unverified Wallets

Anonymous crypto transfers might become history in South Korea.

Major South Korean exchanges will ban transfers to non-verified wallets, following a decision by Coinone. The businesses are adapting to new regulations set by the government.

Exchanges including Upbit, Bithumb, and Korbit, will follow a similar decision by a Korean crypto exchange, Coinone. 

On Wednesday, Coinone announced it would no longer allow deposits and transfers from unverified private wallets. The decision came as a result of new stricter regulations in Korea.

The new rules will require the exchanges to track all crypto transactions from and to their platform. This also means following who the person behind the wallet is. The deadline for businesses to adapt to the new rules is March 25 of 2022.

The main reason behind these new rules is the prevention of money laundering. As a result, other large Korean exchanges will soon need to implement their verification before the deadline.

Users will have until January 23, 2022, to link their wallets to their name. Most crypto exchanges already require users to give out their email, phone number, name and ID card when they register. Now, they will also have to give out their wallet addresses.

If users do not register until the deadline, they will not withdraw their virtual assets on Coinone.

Global Regulations

The new rules are set to comply with Financial Action Task Force, a global watchdog against money laundering. The FATF’s ‘Travel Rule‘ requires that financial institutions, including exchanges, keep a record of the identifying information of both parties of the exchange. This includes wallets that the users want to send their money to.

They also require them to exchange that information for every transaction over $1,000. In Korea, the new regulation sets that threshold at 1 Million KRW, or about $840.

So far, most countries did not fully implement the Travel Rule. However, they are likely to do so shortly. Even Korea delayed its implementation, initially set for 2022.

These are not the only restrictions on Korean traders and exchanges. For example, in 2018, South Korea restricted crypto trading to people with “real-name bank accounts”. The laws required crypto traders to set up a real-name bank account with the same bank as their exchange. Furthermore, both the bank and the dealer had to verify the trader’s identity.

Korean crypto-mania

Despite these restrictions, crypto remains widely popular in South Korea. As a result, the country is at the forefront of crypto adoption.

The tech-savvy Koreans find the promises of huge returns in crypto beautiful. As a result, the Korean virtual assets market is only behind China and the U.S.

Furthermore, according to Coinhills, Korean Won is the fourth most traded national currency in Bitcoin, following USD, Euro, and JPY.

Back in May, due to the decreasing support of young voters in the upcoming elections, Korea decided to delay the crypto tax.

As a result, the tax will take effect in 2023 instead of 2022. The proposed tax would take 20% on all crypto profits. The tax would be in effect for transactions over $2,125. Moreover, the tax would not apply to any NFT made profits.

Even Korean institutions are involved in blockchain. For example, in May of this year, Suseong University partnered with KORAIA to develop a campus in Daegu. The campus will research blockchain and AI and start projects related to them.

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Moreover, in early 2021, the Korean government allocated around $3.2 million to fund startups that use blockchain technology.

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