BitFlyer Now Restricts Cryptocurrency Deposits: Compliance Or Control?

Key Points:

• BitFlyer limits cryptocurrency deposits and transfers to exchanges or wallets that comply with the travel rule.
• Asset types are limited, including Bitcoin, Ethereum, and ERC-20 tokens such as BAT, LINK, MATIC, MKR, SHIB, and PLT.

On May 30th, BitFlyer, one of the largest crypto exchanges in Japan, announced that it will only support cryptocurrency deposits and transfers, such as Bitcoin and Ethereum, from exchanges or wallets that comply with the travel rule.

This restriction is limited to 21 countries and regions, including the USA, Korea, and Hong Kong. The travel rule is a new regulation that requires crypto exchanges to notify the recipient exchange of detailed information about the remittance requester and the recipient.

The main purpose of the travel rule is to prevent criminals and terrorists from misusing cryptocurrencies as a means of payment. To comply with this rule, the “Law for Partial Revision of the Law Concerning Funds Settlement” was enacted in Japan on June 9, 2011.

Asset types are also limited, including only BTC, ETH, and ERC-20 tokens such as BAT, LINK, MATIC, MKR, and SHIB. Cryptocurrency wallets such as MetaMask will remain available, but Coincheck is the only cryptocurrency exchange allowing domestic remittances and deposits.

The crypto assets handled by BitFlyer that are subject to TRUST are Bitcoin and Ethereum, and the crypto assets created according to the ERC-20 standard are BAT, LINK, MATIC, MKR, SHIB, and PLT. As of May 30, crypto assets can only be deposited and transferred between Coincheck and BitFlyer in Bitcoin.

BitFlyer is taking measures to deal with the introduction of the travel rule, and restrictions apply to all corporate and individual customers who deposit and send crypto assets on BitFlyer. From 15:00 on May 30th, deposits and remittances of crypto assets via BitFlyer will be transferred to crypto asset exchanges that have introduced TRUST, a system that complies with travel rules.

This may cause inconvenience to some users, and in the future, general users who use crypto assets will need to check which protocol the exchange company they are using uses and select an exchange or wallet that allows remittance.

The Travel Rule was proposed by the Financial Task Force (FATF), and major U.S. companies such as Coinbase and Circle use TRUST, but cryptocurrency exchanges in Japan and the Asia-Pacific region mainly use Sygna, developed by CoolBitX in Taiwan. TRUST adopted by BitFlyer and Coincheck, uses a different protocol from Sygna Alliance, which is a factor that restricts the remittance of crypto assets even at other domestic crypto asset exchanges licensed by the Financial Services Agency.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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