Implementation of Virtual Currency Anti-Money Laundering 'Travel Rule'... Information Collection and Deposits/Withdrawals Only at Authorized Locations

[Asia Economy Reporter Lee Jung-yoon] Domestic cryptocurrency exchanges that have obtained Virtual Asset Service Provider (VASP) status from the Financial Intelligence Unit (FIU) under the Financial Services Commission will fully implement the Travel Rule starting at midnight on the 25th. The Travel Rule requires exchanges to collect information about the sender and receiver when processing cryptocurrency deposits and withdrawals, and it was established as the world's first measure to prevent money laundering (AML). With the implementation of the Travel Rule, exchanges will collect information for cryptocurrency transactions exceeding a certain amount. Additionally, deposits and withdrawals to and from exchanges or cryptocurrency wallets not authorized will be restricted.

According to industry sources on the 24th, Upbit will apply the Travel Rule to cryptocurrency deposits and withdrawals of 1 million KRW or more. As of the 21st, deposits and withdrawals are only possible with eight domestic exchanges including Gopax, TenAndTen, Prabang, Aprobbit, and three overseas exchanges including Upbit Singapore. These exchanges use VerifyVASP, a Travel Rule system developed by Lambda256, a subsidiary of Dunamu, which operates Upbit.

Furthermore, Upbit allows deposits from domestic exchanges that have completed the virtual asset service provider registration. After passing risk assessments, deposits from overseas virtual asset service providers such as Binance and FTX will also be permitted. However, deposits to accounts owned by others are not allowed.

Bithumb will implement the Travel Rule for all amounts to strengthen anti-money laundering measures. Cryptocurrency transfers are possible to 13 overseas exchanges including Binance, FTX, Coinbase, and Kraken. Among domestic exchanges, Upbit, Coinone, Korbit, and Hanbitco are supported. Discussions are ongoing regarding withdrawal support policies for wallets.

Industry insiders positively evaluate the anti-money laundering function of the Travel Rule but emphasize the need to expand the range of wallets eligible for transfers in the future. A representative from the cryptocurrency data research platform Xangle stated, "It is positive that anti-money laundering becomes relatively easier," but added, "Support for cryptocurrency wallets such as MetaMask and Kaikas is essential. If this is blocked, decentralized finance (DeFi) and non-fungible token (NFT) transactions will be hindered, potentially causing the Korean blockchain ecosystem to become isolated and obsolete."

This content was produced with the assistance of AI translation services.