Three of South Korea’s four major exchanges have launched a joint venture to develop solutions for complying with the Financial Action Task Force’s (FATF) crypto travel rule. The travel rule sets a global standard for virtual asset service providers to combat money laundering and terrorist financing and requires exchanges to collect information on senders and receivers of crypto transactions.
Fast facts
- CODE, short for Connect Digital Exchanges, was launched today by Bithumb, CoinOne and Korbit of South Korea. The three exchanges aim to construct an anti-money laundering system before March 25 next year, which is the deadline mandated for exchanges to comply with FATF’s travel rule. CODE plans in the long term to link its travel rule system with those of trusted exchanges abroad.
- The travel rule is FATF’s anti-money laundering and terrorism funding guideline for virtual asset service providers. South Korea’s financial authorities have included the travel rule guideline in its new set of regulations last year, which requires exchanges to collect information on senders and receivers of crypto transactions of over a million Korean won — around US$860.
- FATF says there are still gaps in the global implementation of its standards. According to its 12-month review released in June, only 58 out of 128 jurisdictions have reported their implementation of the revised FATF standards.
- Meanwhile, the three exchanges of CODE have yet to complete other requirements for Korea’s newest regulations for exchanges, which has the more immediate deadline of Sept. 24. Any exchange that fails to acquire the certification on information security and a bank contract to provide users with real-name withdrawal and deposit accounts faces high risk of being closed down.
- Upbit, the largest exchange in the country, had initially joined the joint venture but left after announcing the development of its own system through Lambda256, the blockchain technology subsidiary of Upbit’s operator Dunamu.