Korean crypto exchanges are now adhering to the travel rule

South Korean crypto exchanges have reached the government-mandated deadline to comply with the so-called travel rule, but not all industry players are happy with the measure.

Starting today, Korean exchanges will list all cryptocurrencies transfers worth more than about $821. Transfers exceeding this value will be restricted to user-verified wallets and a select number of exchanges that have implemented their anti-money laundering system.

The Travel Rule is a set of guidelines issued by the International Financial Regulator Financial Action Task Force (FATF) designed to help authorities track the movement of virtual assets between virtual asset service providers (VASP) such as crypto exchanges or digital asset issuers.

A source at a local centralized exchange today hailed the regulatory move as a step forward for the country’s crypto industry, telling Cointelegraph:

“The industry is now taking a step toward institutional acceptance and will work harder for mass adoption.”

There could be a problem for South Korea’s traders who has generated a crypto market value of $45.8 billion in 2021 to find out which exchanges to send funds to. There are two travel rule systems among the four major exchanges (Upbit, Bithumb, Coinone, and Korbit). Each system works slightly differently and requires international exchanges to follow its guidelines. If these guidelines are not followed, transfers are not permitted.

According to the CEO of South Korea-based crypto VC Hashed, Simon Kim, these differences are likely to cause confusion and frustration among local traders. He believes the Korean crypto community sees the mandate as “clear over-regulation,” as he told Cointelegraph:

“In a state where infrastructure was unprepared, a regulator with little understanding was forced to move forward. Revisions at an appropriate level are expected to follow with criticism from the Korean community.”

The Hash Crypto and Web3 portfolio includes blockchain ecosystems Klaytn and Ethereum, NFT game Axie Infinity, and decentralized exchange dYdX.

Upbit is the country’s largest exchange with over 78.3% of the exchange’s market share according to local data analyst Jun Hyuk Ahn. It has inherited its homegrown Verify VASP program. As of today, Upbit allows transfers to and from its subsidiaries in Singapore, Indonesia and Thailand, Bblock, Gopax, Cashierest, Flat Thai Exchange, Aphrobit, Binance, Bybit, Okcoin, Crypto.com, Coinbase, BITFRONT, Bittrex, Bitbank.cc, Gate.io, Kraken , BitMEX, FTX US and HARU Invest.

Bithumb, Korbit, and Coinone have now all adopted it CODE System. This allows transfers between Coinbase, Kraken, Coincheck, bitFlyer, Bybit, Gemini, Coinlist Pro, Phemex, Bitbank, Line Bitmax, Bitfront, FTX, Binance.

Domestic transfers are blocked until April 8th.

Related: The Bank of England and regulators assess crypto regulation in a series of new reports

The rules can hit the decentralized finance (DeFi) traders hardest as they rely on personal wallets to make trades. Among all exchanges, no transfers to or from private wallets is allowed unless the user confirms the address personally.