South Korean banks are reevaluating partnerships with local cryptocurrency exchanges to determine the feasibility of such cooperation, as Yonhap News Agency reports.
In January 2018, authorities in South Korea banned anonymous cryptocurrency trading in the country. Each trader must identify themselves via a bank account, and the name on the exchange account must match the account holder’s name.
In March 2020, Parliament approved full legalization of digital asset trading. By September 2021, all industry players must comply with financial reporting requirements, KYC procedures, and certify information-security-management systems. They must also register with the Financial Services Commission (FSC).
In April 2021, FSC chairman Eun Sung-soo warned of the risk that all local bitcoin exchanges could be shut down. The regulator says there were about 200 such entities in the country, but only four were registered: Bithumb, Upbit, Korbit and Coinone. Since then, the situation has not changed.
Media reports say K-Bank (which partners with Upbit), Nonghyup Bank (Bithumb, Coinone) and Shinhan Bank (Korbit) are weighing the risks of such partnerships, because banks connected to bitcoin exchanges would also come under closer scrutiny.
In May, the Korea Federation of Banks (KFB) issued guidelines for its members to follow when evaluating crypto exchanges. The document emphasizes the security protocols of trading platforms, their resilience to hacking, token-listing standards, and KYC procedures.
In the first quarter of 2021, South Korean banks processed about ~$57.9 billion in transactions on verified accounts linked to cryptocurrency exchanges, which exceeded the total for 2020.
In June, 11 of South Korea’s 20 crypto exchanges with information-security certificates issued warnings or halted trading of tokens deemed ‘too risky’ by regulators .
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