Bithumb will block crypto withdrawals to unverified private wallets
Starting Thursday, South Korean crypto exchange Bithumb will not allow users to withdraw their crypto assets to unverified private wallets.
Monday, the exchange announcement that it would be the second of the country’s four major exchanges to ban withdrawals to unverified wallets. Coinone adopted a similar policy late last month and other major exchanges that have done so are Upbit and Korbit.
The new policy states that users can only register their own private wallets. To complete the registration process, users must undergo an additional set of Know Your Customer identity verifications.
Withdrawals to any domestic centralized exchange and foreign centralized exchanges with a rigorous KYC process such as Kraken, Bitstamp, Blockchain.com, Bybit, and Binance.US are still universally approved.
Local press briefing money today reported that the exchange has come under pressure from its partner bank, Nonghyup Bank, to change the policy to comply with the FATF travel rule. The travel rule is designed to allow financial institutions to know the identity of senders and receivers of funds across borders.
The bank “strongly demanded” that the exchange “block all personal wallets that do not have their own KYC system.” These wallets include MetaMask and MyEtherWallet, among others.
Every South Korean crypto exchange that offers Korean Won (KRW) trading pairs must have a domestic partner bank that issues real-name bank accounts to its users. A partner bank can have a strong impact on the policies of the exchange, as is the case with Nonghyup to Bithumb and Coinone.
Real-name bank accounts ensure that the person accepting fiat withdrawals from an exchange is the same person trading crypto on their platform. This policy helps exchanges comply with the travel rule before the March 25 deadline.
As of now, Upbit and Korbit exchanges have not released any policy changes regarding personal crypto wallets. Exchanges will be required to define these policies by March 25, when the Korean government deems it necessary for all exchanges to adopt such policies.
Related: Korean Exchange Bithumb to Launch NFT Market
According to StatisticalUpbit handles around 76% of domestic exchange volume while second-placed Bithumb handles around 13%.
Failure to comply with the travel rule could result in increased Anti-Money Laundering and Anti-Terrorist Financing (AML/CTF) scrutiny.