South Korean Crypto Exchanges Resume Service as Usual after Travel Rule Breakthrough

Bithumb Exchange Regulation South Korea Upbit

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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June 26, 2023 06:54 EDT

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South Korea’s biggest crypto exchanges have finally linked their rival Travel Rule solutions – over a month after a new law that requires trading platforms to abide by the protocol came into force.

As previously reported, the Financial Action Task Force (FATF)’s measure, which requires exchanges to monitor and share data on recipients and senders of crypto transactions and flag suspicious-looking transactions, became compulsory in the nation last month.

However, a number of parties expressed their dismay at the time, with exchanges and regulators seemingly unprepared for the new law.

Almost a year ago, the “big four” crypto exchanges, a group that comprises the market-leading Upbit, in addition to Bithumb, Coinone, and Korbit, signed a memorandum of understanding (MOU) on joint Travel Rule cooperation.

But only a month after, Upbit announced that it would develop its own platform named VerifyVASP. The latter was developed by its parent company Dunamu’s Lambda256 blockchain technology-focused subsidiary.

The remaining three exchanges continued with the project as outlined in the MOU, eventually developing their own CODE platform.

However, until this week, CODE and VerifyVASP were not interoperable, meaning that exchanges have not been able to carry out the full extent of their Travel Rule duties – a situation that forced exchanges to suspend inter-exchange transactions for over a month.

News1 reported that while deposit and withdrawal services have now been resumed between the four trading platforms, there still appear to be a few wrinkles that need to be ironed out.

The media outlet quoted an Upbit official as stating:

“Depending on each exchange’s policies, there may be delays in delivering withdrawal information to Upbit, which may result in customers waiting for deposits to show up. Please note that in some case, deposits and withdrawals may be rejected.”

The situation has been somewhat complicated by the fact that a number of smaller exchanges have effectively had to pick a side – with 15 trading platforms opting to use the VerifyVASP solution and seven others adopting CODE.

Gopax, the only non-big-four platform that has a permit allowing it to offer fiat KRW trading, uses VerifyVASP.

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Learn more: 
– S Korean Market Regulator Wants to Label Upbit, Bithumb ‘Large Conglomerates’
– ‘Optimism’ for South Korean Crypto Exchanges as Gopax Makes Banking Breakthrough

– ‘Big Four’ South Korean Crypto Exchanges Say They’ve Blocked Russian Users
– South Korean Crypto Exchanges See Rise in Complaints, More People Turn to Home Mining

– More Big-hitting South Korean Non-crypto Firms Eyeing Token Launches
– ‘Let’s Create a Crypto Ministry,’ Industry Urges South Korean President-Elect