South Korea Reverses Stance On Banking Ban For Crypto Exchanges, Allows Virtual Accounts

During a governmental audit of all state agencies, South Korea Commissioner of the Financial Services Commission (FSC) stated local crypto exchanges would face no issues related to banking and provision of virtual bank accounts. He stressed that as long as the exchanges did their due diligence, such as proper Know Your Customer (KYC) and having Anti Money Laundering (AML) procedures, the exchanges will be able to get banking services.

South Korean exchanges deploy a unique liquidity service in collaboration with local banks, where traders can exchange their cryptos for South Korean Won (KRW) and store them securely within the crypto exchanges.

Reluctance To Acceptance

The start of the year had seen South Korean government pressurizing local banks to stop entertaining crypto exchanges in an effort to clamp down on money laundering using cryptocurrencies. FSC’s war on financial crimes has recently seen cryptocurrencies and exchanges frequently in their crosshair. The commission was able to convince the government in the past to stop crypto exchanges from entertaining non residents in order to ensure laundered and black money would not flow out of the country.

Growing Market

South Korea is seeing a flurry of new and old crypto exchanges. Bithumb, the second largest exchange in South Korea last week closed down all banking options, except from its partner bank, Nonghyup. This has caused many traders and investors to seek out other exchanges and fueled the rise of others.

The government has approved of a number of exchanges, such as Bithumb, Korbit, Coinone and others after ensuring these had proper security measures in place.

South Korea Blockchain Association, representing small to medium level crypto exchanges welcomed the decision. The association has also started an insurance project with larger exchanges to protect funds deposited by the investors.