Due to pressure from a partner bank, Bithumb will only allow withdrawals from authorized wallets to comply with policy changes.
The newly implemented policy changes will force the crypto exchange to accept withdrawals only from personal wallets that have confirmed identities. This KYC measure was instigated by Bithumb’s partner Nonghyup Bank which required the exchange to follow the updated FATF Travel Rule policies.
Based on the report by a South Korean news agency, Nonghyup Bank "strongly demanded" Bithumb to block access from digital wallets without proper KYC like MetaMask because the newly issued policy requires personal information on wallets that receive or send crypto. In fact, the new policy of regulating and taxing cryptocurrencies in South Korea had already been mentioned in late December of 2021.
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The changes in the Travel Rule policy were said to ensure that exchanges and banks can identify if the same person is trading crypto online, converting it into fiat currency, and withdrawing cash.
Likewise, crypto exchanges in South Korea that offer conversions for its national currency Won need to have partnering banks. This is done so that exchanges such as Bithumb or Coinone have their users essentially create "centralized crypto accounts" that are overseen by banks themselves.
While one of the two largest exchanges in South Korea Bithumb and Coinone have been pressed to enforce these KYC measures, Upbit and Korbit have not yet released any statement regarding upcoming changes to their policy.
According to Bithumb’s official announcement, it will be one of four major crypto exchanges in South Korea that bans unauthorized wallets from withdrawing digital assets on their platforms. The policy was said to be in motion starting January 27th of 2022, and its deadline is set for March 25th of 2022.
