Four South Korean cryptocurrency exchanges have been facing stricter regulation as they aim to renew their banking accounts, as reported by a local industry media TheBchain on July 29.
The new regulations follows the recommendations released by Financial Action Task Force (FATF) on virtual currency regulations. As per the report, South Korean cryptocurrency exchanges Bithumb, Upbit, Coinone and Korbit are subjected to the said stricter norms so as to successfully renew their banking partnerships following the FATF guidance released in June.
The new guidance dictates that crypto asset service providers should comply with Anti-Money Laundering so as to combat the financing of terrorism procedures in the same way as traditional financial institutions. Though FATF guidance does not require or legally bind, it can be an effective tool for a country, who has choosen not to adopt the new standards could potentially be excluded from the global financial network.
As per TheBchain, the guidelines makes the banks providing services to crypto exchanges legally liable in cases of money laundering. An official of a major trading site in Korea commented on the development:
“In order to meet this standard, small- and medium-sized exchanges that lack the necessary funds are likely to disappear from the market.”
The new FATF guidance invited criticism from privacy advocates in the industry, earlier this month. One aspect that was especially criticized was the “travel rule,” which requires virtual asset service providers to collect and transfer customer information during transactions.
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