Bithumb to block crypto withdrawals to unverified private wallets

Starting January 27, South Korean crypto exchange Bithumb will not allow users to withdraw their crypto assets to unverified private wall...



Starting January 27, South Korean crypto exchange Bithumb will not allow users to withdraw their crypto assets to unverified private wallets.

On January 24, the exchange announcement that it would be the second of the country’s four major exchanges to ban withdrawals to unverified wallets. Coinone has adopted a similar policy at the end of last month and the other major exchanges are Upbit and Korbit.

The new policy states that users can only register their own private wallets. In order to complete the registration process, users must undergo an additional battery 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 came 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. The exchanges will be necessary to define these policies by March 25, when the Korean government deems it necessary for all stock 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.