NH NongHyup asks Bithumb, Coinone to halt deposit, withdrawal services

South Korea’s NH NongHyup Bank has asked two major cryptocurrency exchanges Bithumb and Coinone to halt deposit and withdrawal services until they adopt stronger money laundering regulations.

A Bithumb official said the bank's request means they have to stop virtual asset transfers with other exchanges that may result in more transaction fees for its customers.

In abiding by NH NongHyup’s request, Bithumb customers would have to withdraw the money in Korean won and buy coins from another exchange to transfer their assets.

The lender also requested both exchanges to quicken their pace in adopting the “travel rule,” which requires virtual asset service providers to divulge user identities of those transferring virtual assets of over 1 million won.

The Financial Action Task Force, an intergovernmental anti-money laundering watchdog, imposes the rule on virtual asset service providers, including cryptocurrency exchanges and digital wallet providers.

The observance of the travel rule is mandated by South Korea’s cryptocurrency law, officially called the Act on Reporting and Using Specified Financial Transaction Information.

The financial authorities are giving local exchanges a grace period to build related systems by March 25, 2022.

Bithumb, Coinone, and Korbit will launch a joint venture to develop a system that helps heed the “travel rule.” Upbit is seeking to create its system.

NH NongHyup recently agreed to extend its current partnership with the two virtual asset exchanges by three months until Sept. 24.