NH NongHyup asks Bithumb and Coinone to stop deposit and withdrawal services
The commercial lender has reportedly asked the two exchanges to speed up adoption of the “travel rule”, a global standard that requires virtual asset service providers to share the identity of users involved in any transfer of virtual assets over one million won ($ 884). The rule is enforced by the Financial Action Task Force, an intergovernmental watchdog against money laundering, and virtual asset service providers include cryptocurrency exchanges and digital wallet providers.
The travel rule is reflected in Korea’s Cryptocurrency Law, officially known as the Law on the Reporting and Use of Specified Financial Transaction Information. Financial authorities are currently giving local exchanges the opportunity to build related systems, but the grace period is expected to end on March 25, 2022.
In June, four major cryptocurrency exchanges here, including Bithumb and Coinone, announced the launch of a joint venture to develop a system that would help them adhere to the ‘rule of travel’. But Upbit, one of the four, said earlier this month that it has decided to pull out of the project, seeking to create its own system. Korbit, meanwhile, decided to stick with the original plan.
Industry watchers believe Bithumb and Coinone are complying with NH NongHyup’s latest request as they need the help of the traditional lender to maintain the current real-name account partnership. A recent amendment to the Specified Financial Transaction Information Reporting and Use Act set a September 24 deadline for all cryptocurrency exchanges here to partner with commercial banks for the issuance of real name accounts. Those who fail to do so and register with the financial authorities before the deadline face a prison term of up to five years or a fine of up to 50 million won. ‘they continue to operate regardless.
NH NongHyup recently agreed to extend its current partnership with the two virtual asset exchanges for three months until the September 24 deadline.
A Bithumb official said the request meant a halt to transfers of virtual assets between cryptocurrency exchanges and expressed concern that his clients would be charged more transaction fees. Due to NH NongHyup’s request, its customers would have to withdraw the Korean won money and purchase coins from another exchange if they want to “transfer” their assets, the official said.