Choi Jong-Ku, the commissioner of the Financial Services Commission (FSC) of South Korea, has reaffirmed that there exists no issues related to compliance and security in the process of banks providing virtual bank accounts to local cryptocurrency exchanges.
At the state affairs audit conducted by the government of South Korea to evaluate the progress of all government agencies and commissioners in the nation, commissioner Choi emphasized that as long as cryptocurrency trading platforms are well equipped with Know Your Customer (KYC) and Anti-Money Laundering (AML) systems, digital asset platforms will be able to obtain banking services from the country’s commercial financial institutions.
“There exists no issue in banks providing virtual bank accounts to cryptocurrency exchanges. If digital asset trading platforms have KYC and AML systems in place, there is no problem in issuing virtual bank accounts to exchanges,” commissioner Choi said.
In South Korea, crypto exchanges employ a unique system called virtual bank accounts that enable users to deposit and withdraw the South Korean won instantly so that users can hold KRW on exchanges securely.
In early 2018, the government of South Korea encouraged banks to prevent working with cryptocurrency exchanges to eliminate the possibility of laundering money using digital assets.
While Nonghyup, a major commercial bank in South Korea that has worked with crypto exchanges for over a year, continued to provide services to local exchanges, in mid-2018, even Nonghyup was pressured to end its services to Bithumb and other major cryptocurrency exchanges.
The public statement released by commissioner Choi clarified the stance of the government and local financial authorities towards cryptocurrency exchanges and in the years to come, local digital asset trading platforms will no longer suffer from the lack of banking services from major financial institutions in South Korea.
South Korea Blockchain Association, which represents both small to medium-size and major cryptocurrency exchanges in the local market, expressed its optimism towards the newly established stance of the FSC and added that the initial problem related to KYC and AML introduced by the FSC 10 months ago have been resolved.
Considering the concerns of the FSC and local financial authorities towards security breaches, the South Korea Blockchain Association and the country’s largest cryptocurrency exchanges have initiated the process of obtaining insurance to protect investor funds.
Bithumb, Upbit, Gopax, Korbit, Coinone, and other large cryptocurrencies have also recently been approved by the government of South Korea for having sufficient security measures and internal management systems in place.
In August, security analysts at KISA and the Ministry of Science and IT told local publications that UPbit, Bithumb, Korbit, Coinnest, Coinlink, Coinone, Coinplug and Huobi a have solid ecurity and internal management systems integrated into their exchanges.
This week, Bithumb, the second largest cryptocurrency exchange in the country, eliminated all banking options on its platform apart from Nonghyup, its partner bank.
Investors, confused by the abrupt decision of Bithumb, experimented with emerging crypto exchanges like Gopax, which is financed by the nation’s second largest commercial bank Shinhan.
Gopax, possibly due to the assistance of Shinhan, supports deposits and withdrawals for all local banks in South Korea, along with Kakao and Dunamu’s Upbit.
The competition in South Korea’s crypto exchange market is increasing with key players like Upbit, Gopax, Coinone, and Korbit gaining more market share, offering investors with several alternative options.
Featured image from FSC.