Coinone, the third-largest crypto exchange in South Korea, has announced that it will no longer allow withdrawals to non-verified external wallets beginning January 2022. On Wednesdays December 29, Coinone stated that all of its users will have to register their external wallets from 30 December to January 24. The crypto exchange will restrict withdrawals after the expiration of such a period. To register, Coinone customers are required to submit information, such as their registered mobile number, full name, email and address in order to verify their wallets. This information must correspond with the information recorded in Coinone.
External wallets are any wallet provided by third parties, which include online ('hot') and offline ('cold') storage options. Such wallets must be verifiable. In other words, they have Know-Your Customer (KYC ) standards in place.
KYC Regulations on Korea’s Crypto
The announcement by Coinone comes at a time when cryptocurrency exchanges in South Korea are expected to comply with legal requirements set out by the authorities. South Korea’s top financial regulator, the Financial Services Commission (FSC), found out after examination that there are 25 exchanges operating in the country. In August, the FSC together with 11 other government offices conducted a preliminary assessment on the 25 crypto exchanges to determine their readiness to meet the new regulatory requirements expected to take effect immediately. The results of the probe identified that none of the exchanges fully met the requirements.
All crypto exchanges operating their business in South Korea were expected to register with Korea’s Financial Intelligence Unit (FIU) under the new regulation by September 24 in order to continue their operations. FIU is a top agency that aims to prevent money laundering and illegal fund flows, including terrorist financing in the country. To register, the exchanges are required to meet four major requirements, which include receiving certification of information security management system and ensuring verification of all crypto account users. Other requirements expect exchanges to register with FIU to comply with the country’s anti-money laundering law and ensure that their CEOs and other senior executive members have no criminal records within the last five years.
The top four exchanges, Upbit, Bithumb, Coinone and Korbit, were previously expected to register with the FIU by early August. However, the exchanges were facing delays because of banks’ additional assessment related to the travel rule. Local banks recently have requested their crypto exchange customers to prepare for the so-called travel rule, which requires digital asset companies to share customer information with other service providers, before the rule takes effect across the world in March 2022.
