South Korean Crypto Exchange Now Have Full Access To Banking Services
Cryptocurrency exchanges within South Korea should not have any problems operating bank accounts, says the chairman of the country's Financial Services Commission (FSC).
Cryptocurrency exchanges within South Korea should not have any problems operating bank accounts, says the chairman of the country’s Financial Services Commission (FSC).
Token Post quotes FSC chief Choi Jong-Ku as having said that exchanges should access banking support as long as these firms have a robust Know Your Customer (KYC) system and implement tight anti-money-laundering (AML) measures.
Previously, South Korean banks provided crypto-related businesses with access to “virtual” accounts which aimed at safeguarding traders by providing them additional anonymity.
However, that changed in January 2018, following the spate of crypto-related fraudulent schemes. The country’s regulators put an end to anonymous cryptocurrency trading and instituted tighter AML rules.
All crypto exchanges were expected to offer services to clients with ‘real name’ bank accounts, a development that saw many of the banks end the use of virtual accounts to remain compliant with the new requirements.
Concerns about the potential for crypto to be used in fraudulent schemes and money laundering contributed greatly to FSC’s decision earlier in the year.
But the statement by the agency’s chairman unequivocally reexamined the practicability of the “virtual account” mechanism and how it can be a part of the banking solutions in the crypto industry.
Choi said that if all the necessary security and compliance measures are put in place, then banks should have “no problem” in providing virtual account service to cryptocurrency platforms.
The statement from the FSC has received a lot of praise from crypto circles, especially from the Korea Blockchain Association.
The group’s chairman Chin Daeje reportedly acknowledged the regulator’s comments about KYC and AML compliance, affirming that the local crypto industry has adequately addressed and “already resolved” these concerns.
The FSC chairman’s positive remarks take on an even more vital weight given that they come at weeks before an anticipated government decision on a long-standing ban on initial coin offerings.
The crypto community in the country expects the government to rescind the ban that has been in place since September 2017.
Bithumb regains banking partner
In August, Bithumb, South Korea’s largest crypto exchange reportedly informed its customers that it could no longer create “real-name virtual accounts.” The decision was due to contractual issues with its banking partner NongHyup Bank.
The bank allegedly suspended its services with Bithumb amid growing concerns about the exchange’s poor security in the wake of a June’s cyber attack on the platform. Hackers made off with about $31.5 million worth of digital coins.
However, Bithumb recently released a statement in which it stated that it had re-established its banking relationship with the lender. It means that the seventh largest crypto exchange in the world by volume can now access banking services and open new accounts.
The platform said that it had to fulfill certain requirements, which included the commitment to hold investor assets in a separate account as well as not accepting interest or deposits.