South Korean Banks Being Forced to Stop Servicing Cryptocurrency Exchanges
- Inadequate internal controls for handling cryptocurrency exchanges found at some banks
- Commercial banks are withdrawing the introduction of real name transaction confirmation service
- Shinhan Bank among those that have backed out while others are still set to make a decision in the coming days
- Prices plummet Thursday as world monitors South Korean crypto market
The cryptocurrency sector received yet another set back Friday when it was revealed that some South Korean banks have been forced to stop offering cryptocurrency exchanges due to strict regulations being enforced by that government.
Bookmaker accepts most crypto-currencies
Bitcoin.com News reports that a number of banks see the government as overreaching.
Following the inspections of six major banks this week, South Korean regulators have uncovered some inadequate internal controls for handling cryptocurrency exchanges. Given the government’s strict rules, some banks have decided to stop providing services to cryptocurrency exchanges instead of overhauling their systems further to comply with the regulations.
The South Korean Financial Intelligence Unit (FIU) and the Financial Supervisory Service (FSS) will continue its inspections through Thursday January 16.
Woori Bank, KB Kookmin Bank, Shinhan Bank, Nonghyup Bank, Korea Development Bank (KDB), and Industrial Bank of Korea (IBK) are each being audited.
On Friday, local publications reported that some banks have withdrawn from implementing the government mandated, real-name verification system.
From eToday:
As the government increased pressure on the virtual currency market, commercial banks are withdrawing the introduction of real name transaction confirmation service.
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Bitcoin is big business in South Korea...but for how long?
Among those who will be getting out of the cryptocurrency exchange biz, Shinhan Bank.
They announced Friday that it will stop providing virtual account services to crypto exchanges.
Other banks are contemplating whether to follow suit. An official from IBK bank said, “We also decided to shut down our existing [virtual] accounts.” An official at KEB Hana Bank commented, “I do not think it is permissible to provide a virtual currency trading account.” Both KEB Hana Bank and KB Kookmin Bank “will not go into virtual account services until the authorities’ policy is decided,” Kookje reported.
Nonghyup Bank was expected to make a decision shortly.
The uproar has divided South Korea.
Reuters notes:
With a tech-savvy population quick to adopt the latest gadgets and a young generation facing dim prospects in the conventional workplace, South Korea has been a fertile ground for virtual currencies.
But the country’s swift embrace of bitcoin and other cryptocurrencies has been met with an equally swift backlash by regulators, who have gone so far as to propose outright bans on trading.
With markets around the world watching, South Korea has become a fault line between a generation that sees cryptocurrencies as a way to a better life, and government officials who have likened the market to gambling and warned that it encourages illicit behavior.
Park-Sang-ki says he might halt cryptocurrency trading altogether
Cryptocurrency prices across the board plummeted Thursday as the world watched South Korea. The situation was made worse when justice minister, Park Sang-ki, suggested at one point the government might halt cryptocurrency trading.
As of Friday, a petition on the website of the presidential Blue House had drawn more than 120,000 signatures opposing the move. Heavy internet traffic briefly crashed the site.
- Aaron Goldstein, Gambling911.com
