The majority of cryptocurrency trades in South Korea are unable to utilize the new government-mandated system that has recently been implemented. Six major banks have installed the real name system, but only three have decided to offer the crypto exchange service. In addition, only the four largest stock exchanges in the country receive this service from the banks.
It has been less than a week since the new real account system for South Korean cryptocurrency trades came into effect. As of January 30, existing virtual accounts issued by banks for cryptographic exchanges must be converted to real accounts in order to deposit money to trade cryptocurrencies.
Most Korean cryptocurrency trades can not use the government-mandated system Regulators have previously announced that 6 major banks have installed the real-name system: Shinhan Bank, Nonghyup Bank, Industrial Bank of Korea, KB Kookmin Bank , KEB Hana Bank and Gwangju Bank. However, local media reported Saturday that only the first three on the list actually decided to provide a real account service for cryptocurrency trading.
According to the Korean Blockchain Association, there are at least 25 cryptocurrency exchanges in the country. However, only the sites Bithumb, Upbit, Coinone and Korbit had their virtual accounts converted into real names, according to local media.
Stating that the rest of the exchanges "continue to ignore the real-name system guidelines," Hankyung wrote:
The government encourages monopoly.
While the South Korean regulators ensured that the 6 banks set up the real name system, the banks are not mandated to provide services to cryptocurrency customers.
Yonhap quoted a bank official as saying, "The issuance of new confirmed accounts at a virtual exchange office is a voluntary decision of the bank. The manager explained: "Banks that have legal obligations in terms of prevention such as the confirmation by the customer of the exchange of virtual currencies and the stability of the system, the device of protection of the customers and the procedures of the fight against the money laundering.
The new account issue is limited to trading with systems that exceed the specified requirements, which means that if the conditions are not fulfilled, the new real name verification account may be rejected.
Shinhan Bank, which serves Bithumb, also made the decision to temporarily exclude the exchange from its real-account issuance process, Asia Economic reported. A representative of Shinhan Bank explained that the bank "temporarily suspended the issuance of accounts [Bithumb] in consideration of the fact that they [Bithumb] were under investigation by the police. On Friday, the police conducted an on-site investigation of Bithumb to find out who hacked the exchange last year.
The Korean Blockchain Association estimates that there are about 787,600 clients using small and medium-sized stock exchanges that do not have virtual accounts, Yonhap detailed. These exchanges use corporate accounts to hold client funds, a practice that regulators want to eliminate, citing the high risks of money laundering.
Currently, some exchanges that have not received their new accounts have confirmed that they will suspend transactions if the same situation persists after a certain period of time.
However, the publication pointed out that regulators have stated that it is possible to continue using corporate accounts, provided that the exchanges can properly fulfill their obligations against money laundering as well as confirm the customer identity. In addition, they will be "subject to intensive controls by banks and financial authorities".