One of South Korea’s biggest crypto exchanges – Coinone – has told its customers that they will no longer be able to make withdrawals to “unregistered” wallet addresses as of next month. Observers both in South Korea and overseas say that similar measures may become commonplace for major trading platforms in the year ahead.
In an official post, the exchange explained that “all customers who need to withdraw virtual assets to an external wallet” including those run by “domestic and overseas corporations” will need to register the wallets with the platform.
Coinone appears to want to steer customers away from wallets that do not perform know-your-customer (KYC) protocols in a bid to avoid inadvertently playing a part in money-laundering efforts.
As of January 24, all unregistered wallet withdrawals will be blocked, the exchange continued, although customers could add more wallet addresses at a later date. The firm explained its move as a bid “to ensure that [its] cryptoasset transactions or services are not used for illegal activities such as money laundering.”
The trading platform added that wallets would be checked to ensure that customers’ real names and social security numbers matched the addresses tokens were being sent to.
Industry observers noted that similar moves were very likely from European and United States-based players in the near future.
“Witnessing the resulting irony of “pundits” who champion these efforts today complain about Big Tech owning both our social *and* financial lives in the wake of these decisions in the future will fill me with enough schadenfreude to almost make the fallout worth it,” Collins Belton, the managing partner of the legal firm Brookwood, said.
“Nearly all” exchanges might be abiding by such protocols by the end of 2022, opined another Twitter user.
Some will likely interpret the move as another zealous-looking bid to prove trading platforms are capable of self-regulation. Earlier this year, Coinone and its “big four” rivals (Korbit, Bithumb, and Upbit) executed a number of late-night altcoin purges. The purges were seemingly part of an effort to prove how socially responsible they are to regulators whom many have accused of being trigger-happy.
Earlier this year, the “big four” promised to adopt Financial Action Task Force Travel Rule compliance solutions, almost a year ahead of the debut of legislation that will compel them to do so. A number of their smaller rivals have recently announced plans to follow suit. Experts in the media have opined that the moves are signs that the industry has a willingness to “self-regulate,” adding withdrawal limits and other measures without obvious regulatory instruction.
It is not impossible that South Korean trading platforms are attempting to second-guess regulators in a bid to win official self-regulatory status. Over the sea to the east in Japan, a similarly strict regulatory regime has granted the body policing the crypto sector official self-regulatory status.
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Learn more:
– Crypto Exchanges in 2022: More Services, More Compliance, and Competition
– 2022 Crypto Regulation Trends: Focus on DeFi, Stablecoins, NFTs, and More
– S Korea Now Has 24 Licenced Crypto Exchanges – But Most Are Stuck in Crypto-to-Crypto Purgatory
– Chinese Crypto Users Still Find Ways to Circumvent Ban
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