The Block: Coinone will no longer allow 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.

The change comes into effect on January 24, 2022. That 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.

"If you need to withdraw Coinone's virtual assets to another virtual asset wallet from January 24, 2022, in accordance with the fulfillment of the customer verification system obligation, you must register the wallet address to be able to withdraw," said the exchange.

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.

"It is impossible to register a wallet address that cannot verify identity information," said Coinone.

Since wallets such as MetaMask and Ledger do not require KYC, 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.

Why the change? Coinone said it needs to ensure that customers are not using crypto for illegal activities such as money laundering. Thus, it requires customers to register their wallets to be able to withdraw funds.

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.

Korean regulators have taken a series of measures to curb illegal crypto transactions. More recently, the country's crypto exchanges were mandated to various requirements such as data maintenance, internal controls, reporting suspicious transactions, and performing KYC to verify customer identities.

It is likely that other big Korean crypto exchanges, including Upbit, Bithumb, and Korbit, will announce similar restrictions such as Coinone.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.