Coinone to Stop Withdrawals to Unverified External Wallets

Coinone, one of the "Big Four" crypto exchanges in South Korea, announced Wednesday that it will no longer allow withdrawals to non-verified external wallets effective on January 24, 2022, which means Coinone users will have to register their external wallets with the exchange, or else they will no longer be allowed to withdraw their funds held at their exchange accounts.

External wallets include any wallets that third parties offer, including "hot" (online) and "cold" (offline) storage options. But these wallets must be registerable or verifiable, i.e., they must have know-your-customer (KYC) information in place. For example, wallets such as MetaMask and Ledger do not require KYC, so Coinone users won't be able to withdraw their funds to these wallets. Custodial wallets such as those offered by exchanges like Binance and FTX require KYC, and hence these can be verified with Coinone.

According to Coinone, customers need to submit information such as their full name, email addresses, and registered mobile phone number in order to verify their wallets. This information must be the same as the information recorded in Coinone. That means customers cannot register someone else's wallets and it is impossible to register a wallet address that cannot verify identity information. 

The change shows that Coinone needs to ensure that customers are not using crypto for illegal activities such as money laundering by requiring customers to register their wallets to be able to withdraw funds.

​Korean regulators have strenghthened regulations on crypto transactions. According to a new regulation, all crypto exchanges operating their business in South Korea were expected to register with Korea's Financial Intelligence Unit (FIU) by September 24 in order to continue operation. FIU is a top agency that aims to prevent money laundering and illegal fund flows, including terrorist financing in the country. It requires all exchanges to meet major four requirements, which include receiving certification of information security management system and ensuring verification of all crypto account users.