The four largest South Korean crypto exchanges have reached a Memorandum of Understanding (MOU). This will allow them to implement the Financial Action Task Force’s Travel Rule.
All the exchanges in the group, including the market-leading Upbit, Bithumb and Korbit, are expected to meet the September 24 deadline for regulatory approval by the Financial Services Commission (FSC). The FSC will be conducting spot-checks on trading platforms over the next weeks.
The Travel Rule basically states that crypto trading platforms must share transaction identification information with each other, as well with financial institutions and obliged entities. They must also be able guarantee the accuracy of their data. In order to eliminate anonymity and lower the risk of money laundering, data such as national security numbers or identity numbers must also be shared with recipients and customers.
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. According to the official, who requested not to be identified and did not want to reveal their exchange’s name, he added:
“They want to show the FSC that they go above and beyond to impress them.”
Regulators are busy and have pledged to “crackdown” on fake accounts at crypto exchanges. A few smaller South Korean exchanges permit customers to use “hive” and “honeycomb accounts to hide or conceal their identities. Seoul has promised to stop this and has decreed that all cryptocurrency traders must use real name-verified wallets connected to domestic, commercial bank accounts starting 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. A “risk management system” for cryptoasset operators has been created by the regulator. It will enable it to “continuously examine fake accounts” and ask financial sector companies to take “countermeasures” when they find them.
Financial companies will have the ability to suspend transactions that they suspect 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. Before committing to six-month long real name banking deals, banks have been instructed to perform risk management checks on cryptocurrency exchange partners.