The Financial Services Commission of South Korea (FSC) informed cryptocurrency firms of the obligation, from 25 March 2022, to comply with the FATF travel rule. They must collect and share information about users making transactions of 1 million won or more (about $817).
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“FATF must relay the names of the senders and recipients of the [transaction], as well as the addresses of the virtual assets on the receiving side. The payment initiator must also provide the registration number of the sending resident within three business days from the receiving party’s or regulators’ request,” the notice says.
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Companies are also required to retain the relevant user information for five years from the date of the transaction. Non-compliance may incur disciplinary measures.
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The new rule could curb the ability of South Korean traders to conduct crypto transactions. With the exception of the \”big four\” exchanges — Bithumb, Upbit, Korbit and Coinone — and a number of smaller platforms, other players in the sector lack the necessary FSC-compliant systems.
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The implemented mechanisms suffer a material shortcoming: they require foreign platforms to adopt similar principles.
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According to The Chosun Ilbo, Upbit users can transfer assets to accounts on only eight local platforms, as well as the company’s units in Singapore, Indonesia and Thailand.
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Bithumb also restricted the list of platforms to which customers can send transfers, alongside overseas exchanges such as Coinbase, Kraken and Binance. Users can also withdraw assets to non-custodial wallets such as MetaMask. Transfers to local platforms were blocked until 8 April 2022.
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As noted, the National Assembly of South Korea passed a legislative amendment providing for the introduction of cryptocurrency taxation from January 1, 2023.
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