Coinone, one of the four largest exchanges in South Korea, announced on Wednesday (29) that it will restrict the withdrawal of cryptocurrencies only to verified external wallets.
This means that users who do not verify their external wallet on the platform will not be able to withdraw their cryptocurrencies held on the exchange from January 24th.
On a official statement, the exchange clarified that this rule applies to all types of external wallets, whether hot wallets — “hot wallets”, those connected to the Internet — or cold wallets — “cold wallets”, hardware devices created to store cryptocurrencies offline.
The broker confirmed that it will be “impossible to register a wallet address that cannot verify identity information”. This means that wallet clients like MetaMask and Ledger, which do not require KYC from the user, will no longer be able to be used to receive withdrawals from the exchange.
This type of restriction is not common in the crypto market and has jumped into the eyes of many users by implying that cryptocurrency withdrawals would only be allowed for wallets at other centralized brokerages that require user KYC.
“A consequent question would be… what about deposits? So would depositing from an “unverified” wallet work? Otherwise, I don’t see how people could use this exchange. This really doesn’t make sense.” commented on Twitter @LefterisJP, developer of Ethereum.
Coinone justified the implementation of the new rule as a way to ensure that cryptocurrencies purchased on its platform will not be used for illegal activities, such as money laundering.
Restrictions intensify in South Korea
Another 20 exchanges registered in South Korea, including the most popular ones like Upbit, Bithumb and Korbit, are expected to adopt restrictions similar to Coinone from next year, more specifically until March 25th.
This is the deadline established by the South Korean government for brokers to find ways to accurately track cryptocurrency transactions purchased on their platforms, even transactions that take place outside their system.
The goal is for companies to comply with the Financial Action Task Force’s (FATF) ‘Travel Rule’ by March of next year, which makes it mandatory for local brokers to detail cryptocurrency transactions to authorities .
This is yet another advance in the surveillance of the cryptocurrency market in the country, which in March implemented a new law to regulate the sector. The new legislation required all companies in the area to register with the Financial Services Commission (FSC), and increased the requirements regarding the identity checks carried out on their users.