The South Korean Financial Services Commission (FSC) has notified cryptocurrency companies that they must comply with the FATF “travel rule” from last March 25. They are required to collect and share information about users who make transactions worth 1 million won or more. According to the notice:
“VASP is required to transfer the names of the senders and recipients [of the transaction], as well as the addresses of the virtual assets, to the receiving party. The originating company is also required to provide the sender’s resident registration number within three business days of a request from the receiving party or regulators.”
Companies are also required to keep the relevant user information for five years from the date of the transaction. In case of violation, disciplinary measures are provided.
The new rule may limit the ability of South Korean traders to conduct crypto transactions. With the exception of the “big four” exchanges (Bithumb, Upbit, Korbit and Coinone) and a few smaller platforms, other players in the sector lack the systems necessary to comply with FSC requirements.
The implemented mechanisms have a significant drawback, and it is that they require similar principles to be adopted by foreign platforms.