Korea’s major banks support crypto currency exchangesKorea’s major banks support crypto currency exchangesBy Patrik Eberle – January 23, 20180Major Banks Korea Crypto Currencies
Six of Korea’s major banks, including Shinhan Bank – South Korea’s second largest bank – will officially support local crypto currency exchanges with virtual bank accounts.
Table of Contents Virtual accounts reopened / facilitation of tradersKnow your Customer and Anti-Money LaunderingBithumb and basketBan on crypto currencies unrealisticVirtual accounts reopened / facilitation of tradersAt South Korean crypto currency exchanges, each trader or investor is provided with a virtual bank account, which is used to deposit large sums of FIAT money or the Korean won. Virtual bank accounts allow traders and investors to trade Fiat crypto currencies efficiently without having to use actual bank accounts, which are quite costly and time consuming.
Know your Customer and Anti-Money LaunderingAt the beginning of this month, South Korean stock exchanges were asked by local financial authorities to overhaul their current KYC (=”Know your Customer”) and AML (“Anti-Money Laundering”) systems. KYC – Know your customer is a mandatory legitimation check of new customers, especially for credit institutions, to prevent money laundering. Two conditions demanded by the government are the ban on trading foreigners and the elimination of anonymous trading accounts.
The changed anti-money laundering system resulted in banks being asked to close virtual bank accounts for crypto currency exchanges. Kookmin Bank – the largest bank in South Korea – refused the service for crypto currency exchanges. The bank justified this conclusion because of fears that the government could prohibit crypto-currency trading. This was denied by the government shortly afterwards.
Bithumb and basketOnly recently, Bithumb and Korbit, two of the largest crypto currency exchanges, have introduced massive changes due to the AML (Anti-Money Launderig) guidelines. At the end of January, the Korbit crypto currency exchange announced that foreigners will no longer have the opportunity to trade on South Korean stock exchanges.
Korbit also announced that traders with Shinhan bank accounts will not be able to trade again until February. While the AML conversion can be unfavorable for existing users, it is quite positive for the market, as the government will no longer be able to threaten crypto currencies, since all requirements of the Anti Money Laundering System are fulfilled.
Ban on crypto currencies unrealisticInstead of banning the crypto currency market, the South Korean government has decided to adopt the regulatory approach. As the spokesman of the FSC (Financial Service Commission) pointed out, a ban on crypto currencies is unrealistic. Due to electronic commerce law, the government does not even have the authority to close crypto currency exchanges.