Bithumb, Coinone and Korbit have formed a joint venture to develop systems that will meet travel rule requirements by March 2022.

The South Korean crypto exchanges Bithumb, Coinone and Korbit have jointly founded a company that they want to use to comply with the incoming AML rules.

The company – CONnect Digital Exchanges (CODE) – was funded with KRW 900 million, with each exchange holding a third of the shares and equal voting rights.

The company’s CEO will be Cha Myung-hoon, the current CEO of Coinone. A new CEO is appointed every two years.

CODE is used to develop systems that meet the travel rule, which requires customer information to be exchanged by exchanges when transferring digital assets from one to another.

According to the revised “Law on the Reporting and Use of Specified Financial Transaction Information”, which came into effect on March 25, crypto exchanges have one year until March 2022 to meet the travel rule requirements in relation to all transactions in virtual assets worth more than 1 million KRW to be met.

This requires that they verify the identity of their customers as well as the senders and beneficiaries of transfers and forward this information to the counterparties.

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CODE will seek to develop data monitoring and sharing systems that comply with travel rules as some banks have required crypto exchanges to implement strict AML standards in order to do business with them and their customers after September 24th.

Crypto exchanges are required to sign agreements with banks that allow them to issue real-name bank accounts to customers by September 24th in order to register to operate in Korea.

> ALSO READ: All VASPs Unprepared for New AML Rules, FSC Korea Funds (August 18, 2021)

So far, only Korea’s largest crypto exchange, Upbit, has received registration and used a partnership with K-Bank to verify the real name. Upbit also planned to join the CODE partnership but dropped out of the agreement as the move could be viewed as anti-competitive.

NongHyup Bank is currently offering accounts for Bithumb and Coinone users, but has asked the exchanges to speed up their travel rule preparations to extend their existing agreements beyond September 24th.

Upbit plans to use a solution developed by Lambda256 to comply with the travel rule. Both Upbit and Lambda256 are operated by the local fintech Danamu.

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