Bithumb would no longer enable customers to withdraw crypto assets to unconfirmed private wallets starting From January 27.
On January 24, Bithumb stated that it will be the second of the country’s four main exchanges to prohibit withdrawals to unconfirmed wallets. Coinone implemented a similar guideline late last month, while Upbit and Korbit are the other main exchanges.
Was the bank a factor in the decision?
According to the new regulation, users may only register their own private wallets. Users must go through an additional battery of know-your-customer identification verifications in order to complete the registration procedure.
Withdrawals to any local centralized exchange and international centralized exchange with a strict KYC process, such as Kraken, Bitstamp, Blockchain.com, Bybit, and Binance.US, are still generally accepted.
According to the local news portal Money Today, the exchange was under pressure from its partner bank, Nonghyup Bank, to adjust its policy in order to comply with the FATF Travel Rule. The Travel Rule is intended to provide financial institutions with information on the identities of those who transfer and receive funds across borders.
The bank “insists” that the exchange “block any personal wallets that do not have their own KYC system.” Among these wallets are MetaMask and MyEtherWallet.
Every South Korean cryptocurrency exchange that provides trading pairs in Korean Won (KRW) is required to have a domestic partner bank that provides real-name bank accounts to its consumers. As with Nonghyup to Bithumb and Coinone, a partner bank can have a significant effect on the exchange’s rules.
Real-name bank accounts ensure that the individual taking fiat withdrawals from an exchange is also trading cryptocurrency on the exchange’s platform. This policy assists exchanges in meeting the Travel Rule deadline of March 25.
Upbit and Korbit have not yet made any policy modifications regarding personal crypto wallets. When the Korean government deems it essential for all exchanges to adopt such measures, exchanges will be forced to set those policies by March 25.
According to Statista, Upbit handles around 76 percent of domestic trade activity, while Bithumb handles approximately 13 percent.
Failure to comply with the Travel Rule may result in greater anti-money laundering and counter-terrorism financing (AML/CTF) surveillance.