Coinone, one of South Korea's largest cryptocurrency exchanges, has announced that customers will be unable to withdraw funds to "unregistered" crypto wallet addresses starting next month. Observers both in South Korea and abroad believe that major trading platforms will follow similar procedures in the near future.
The exchange announced in an official statement that “all customers who wish to withdraw virtual assets to an external wallet”, including those run by “domestic and overseas" businesses, will need to register the wallets with the platform.
As of January 24, all unregistered wallet withdrawals will be prevented, the exchange announced, although customers may add additional wallet addresses at a later time. The company attributed its decision to "to ensure that [its] cryptoasset transactions or services are not used for illegal activities such as money laundering.”
The cryptocurrency trading platform warned that wallets would be verified to ensure that customers' real names and social security numbers were correct. It's only a matter of time before European and American firms follow suit.
"Witnessing the resulting irony of "pundits" who champion these efforts today complain about Big Tech owning both our social and financial lives in the wake of these decisions in the future will fill me with enough schadenfreude to almost make the fallout worth it," said the managing partner of the legal firm Brookwood, Collins Belton.
Twitter users have claimed that, by the end of 2022, all exchanges will be following these standards.
Some may see the move as another zealous attempt to demonstrate that trading platforms can self-regulate. In April, Coinone and its "big four" competitors (Korbit, Bithumb, and Upbit) carried out a slew of late-night cryptocurrency purges. The purges were probably intended to demonstrate how socially aware they are to regulators who have been accused of being trigger-happy.
Earlier in 2021, the "big four" agreed to implement Financial Action Task Force Travel Rule compliance solutions more than a year before the law requires them to do so. A number of their smaller rivals have recently announced plans to follow suit. The actions are seen by experts in the media as proof that the sector is "self-regulating," with restrictions on withdrawals and other measures introduced without obvious regulatory guidance.
It's also possible that South Korea's trading platforms are attempting to anticipate regulators in order to obtain official self-regulatory status. In Japan, a similarly rigorous regulatory framework has granted the agency policing cryptocurrencies official self-regulatory status.