3 crypto exchanges launch ‘travel rule’ joint venture

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South Korea’s three top cryptocurrency exchanges – Bithumb, Coinone and Korbit – have formed a joint venture to jointly develop solutions for a “travel rule” system, the companies announced on Tuesday.

They each invested 300 million won ($ 258,115) in the new joint venture, CONnect Digital Exchanges or CODE, to complete the mandate ahead of the deadline set by the government and an international anti-money laundering organization.

The travel rule is a global standard imposed by the Financial Action Task Force, an interstate anti-money laundering watchdog, for virtual asset providers such as cryptocurrency exchanges and digital wallet providers. This is reflected in the Korean Virtual Assets Act, officially known as the Law on Reporting and Using Specified Financial Transaction Information. According to the law, by March 25, 2022, the country’s virtual asset providers are required to put in place a travel rules system that includes verifying the identity of senders for international transfers over 1 million won.

Although the official deadline is still seven months away, cryptocurrency exchanges are facing increasing pressure from local banks to work with to get real name accounts to implement the new system early on. At the beginning of August, NH Nonghyup asked its two partners Bithumb and Coinone to discontinue deposit and withdrawal services and to introduce a travel rule system by September 25th.

Coinone CEO Cha Myung-hoon will take over the management of the newly founded joint venture for two years.

Earlier this year, four exchanges – including Upbit, the largest cryptocurrency exchange by number of subscribers and transactions – announced that they were joining forces to develop a travel policy system. However, in July, Upbit left the group, saying its participation could be viewed as a market collusion. Upbit develops its own system through a subsidiary based in Singapore.

(gypark@heraldcorp.com)