Domestic exchanges have limitations on futures trading and leverage features. In contrast, overseas exchanges can freely utilize these features, which naturally draws the interest of investors looking for various investment options.
However, there are certain aspects that must be addressed when using overseas exchanges. This is the Travel Rule.
If you proceed with deposits and withdrawals without understanding this system, you may experience the inconvenience of having your funds temporarily blocked. Today, we will learn about the meaning of the Travel Rule, its application criteria, and how to safely deposit assets.
If you focus for just 5 minutes, you can understand how to safely deposit and withdraw coins without suffering unnecessary losses due to complex regulations.
If you haven't signed up for an overseas exchange yet, please proceed with the registration through the link below.
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1. Reasons for using overseas exchanges
Overseas exchanges with various types and high interest rates, like Binance, are evaluated much more attractively.
However, when transferring funds from domestic exchanges to overseas exchanges, the travel rule must always apply.
There are no exceptions even if the amount is less than 1 million won.
There's no need to feel it’s difficult. The most important point is that the English names and birth dates of the domestic and overseas exchanges must match exactly.
If there is even one letter or space that is different, the withdrawal may be delayed or blocked, so be careful.
2. The meaning and application criteria of the travel rule
Our country has been implementing the travel rule in earnest since March 25, 2022, due to the revision of the Special Financial Transactions Act.
The travel rule refers to the international standard that requires the transmission of sender and receiver information in order to prevent money laundering during cryptocurrency transfers.
Initially, it was applied only to transactions of over 1 million won,
but starting from February 2025, the travel rule will also apply to transactions under 1 million won at major exchanges such as Bithumb and Upbit.
Dividing the transaction amount to avoid the travel rule may actually be considered a 'suspicious transaction'.
If you move funds in this way, there is a risk that the exchange may block deposits and withdrawals entirely, so you must be cautious.
There have been cases where issues arose because some investors divided their amounts when sending funds,
Understanding the meaning and criteria of the travel rule accurately and complying with it is the safest method.
3. Deposit method
So how can you deposit safely without your funds being tied up? The method is simpler than you think.
The most important principle is to set the account names to be the same for domestic and overseas exchanges.
Every letter in your English name and even the spacing must match perfectly.
The deposit process is as follows.
Obtain the deposit address from the overseas exchange where you will deposit (e.g., Binance).
Enter the corresponding address on the withdrawal screen of the domestic exchange.
Once you accurately select the network and send the funds, you're done.
You must follow this process accurately to prevent funds from being sent incorrectly or lost.
Especially if this is your first trade, it is advisable to conduct a small test deposit.
4. The travel rule, a safety device rather than a complex regulation
The travel rule is not a cumbersome restriction but rather a minimal safety device to protect the investor's assets.
If you accurately understand the meaning and criteria of this system, you can sufficiently prevent issues with funds being tied up when transferring coins from domestic exchanges like Upbit or Bithumb to overseas exchanges.
The travel rule is also a basic rule for creating a legally safe trading environment.
Therefore, it is wise for investors to develop the habit of checking once every time they proceed with a transaction.
In this article, we have thoroughly examined the meaning of the travel rule, its application criteria, and how to deposit safely. If you understand this content well, you will be able to manage your assets safely without getting caught up in complex regulations.
When you invest in coins in the future, please refer to this information to ensure safer and more efficient trading.