Four major crypto exchanges in South Korea have joined hands to establish a joint venture to fight against money laundering. The heads of Bithumb, Korbit, Coinone, and Upbit signed a memorandum to form a system, which will enable them to adhere to the travel rule.
Complying with the travel rule
The travel rule is a global standard imposed by the Financial Action Task Force, an intergovernmental anti-money laundering watchdog, on virtual asset service providers like digital wallet providers and crypto exchanges.
As per the announcement:
“The rule requires virtual asset service providers to share the identities of users involved in any virtual asset transfers over 1 million won ($884).”
The regulation is expected to work like a SWIFT code, which is widely used as the industry standard in traditional financial institutions.
This rule is outlined in South Korea’s cryptocurrency law known as the Act on Reporting and Using Specified Financial Transaction information.
The joint venture is intended to cut costs
In a joint statement, the four companies noted:
“Instead of developing their own systems, the companies decided to co-develop a system that can be used industrywide.”
South Korea has been a notable player in the crypto space.
According to a recent study by Alba Heaven, an information provider, 23.6% of South Korean college students were investing in cryptocurrencies out of 1,750 people.
The survey noted that these students were inclined to invest in this territory based on the global crypto craze experience.
The respondents also cited high investment returns, low barriers to entry, and an opportunity to overcome class hierarchy as other reasons they step into crypto investment.
On the other hand, the South Korean administration announced last month that it was not relenting on its quest to levy a 20% income tax on capital gains from crypto transactions in 2022, despite growing investor concerns for the taxation plan to be delayed.
Image source: Shutterstock