16.01.2021

OKEX Korea Drops 5 Privacy Coins Citing FATF Rules

The South Korean arm of the Malta-based OKEX exchange announced early on Monday that it is to delist five cryptocurrencies that provide extra privacy features for users. From Oct. 10, the exchange will no longer support trading in Monero (XMR), dash, zcash (ZEC), horizen (ZEN) and super bitcoin (SBTC).

Regulatory pressure on cryptocurrency exchanges to stop providing users with access to so-called privacy coins is growing.

In its notice, OKEX Korea said it will delist cryptocurrencies that “violate laws or regulations [and] policies of government agencies and major agencies.”

Specifically, in this case, it cited the “travel rule” recommendation to national regulators from the Financial Action Task Force (FATF) as the reason for pulling the five coins.

The exchange said that as per FATF’s rule, “it is recommended that exchanges be able to collect relevant information such as the name and address of the sender and recipient of the virtual asset.”

As such, it had decided to delist the cryptocurrencies that did not allow that data to be obtained.

The U.K. arm of Coinbase also dropped support for zcash in August, likely due to the need to identify users when required by authorities.

This summer, FATF finalized its recommendations to its 37 member nations, including a controversial requirement that “virtual asset service providers” (VASPs), including cryptocurrency exchanges, pass information about their customers to one another when transferring funds between firms.

The so-called travel rule has been a requirement for international banks when sending each other money on customers’ behalf for some time, but has been described as onerous for blockchain firms and harmful to user privacy.

The global anti-money laundering body gave members 12 months to implement the new recommendations that, while not mandatory, could see nations not complying put on a finance blacklist.

Since June, compliance solutions providers in the crypto space have been moving to launch systems aimed to help exchanges pass each other the required data.

OKEX Korea said that customers have until Dec. 10 to withdraw any of the five delisted coins from the platform.

Only 1 Crypto Fund Has Passed Hong Kong’s SFC Regulatory Hurdles in First Year

A year after the Hong Kong Securities and Futures Commission (SFC) published initial regulations for funds investing in crypto, only one firm has successfully passed that gauntlet.

Hong Kong-based Diginex remains the sole crypto fund to pass the regulatory hurdles issued in Nov. 2018 and formalized this October, according to research from Reuters.

As CoinDesk reported at the time, the 2018 framework applied new regulations to any fund that invested 10 percent or more of its portfolio in virtual assets. The 37-page guidance issued last month adopts many standard practices held by funds overseen by the regulator already, such as capital reserves on hand. New rules include who can act as custodian for crypto assets, for example.

Still, only one firm has cleared the SFC’s hurdles to-date, Reuters says, while other funds are moving out of Hong Kong to “skirt” the SFC. Many firms are also applying for approvals without the intention of receiving the license, but just for appearances, according to the Reuters research.

However, outside factors remain for the low volume, including possible hangover from the crypto bear market that may be giving spurned funds second thoughts.

“The volatility and poor returns in 2018 scared large institutions away from allocating to crypto funds, causing those who survived to shelve their licensing plans,” Jehan Chu, partner at Kenetic Capital, a venture capital firm focusing on digital assets, told Reuters.

SFC declined to comment on both the process and pending applications, Reuters said.

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