South Korean crypto exchanges are planning to renew their banking deals with domestic banks. However, the exchanges are feeling pessimistic about doing so owing to fear of recent regulations. With the agreement between local banks and South Korean exchanges set to expire by month-end, exchange firms are set to be putting all energy into negotiations with banks.
Existing regulation rules that the country’s exchanges are compelled to enter into six-month renewable arrangements with domestic banks. Both parties are also supposed to meet specific criteria regarding customers’ withdrawal and deposits. These criteria are to be made using government-sanctioned real name-verified, social security number-protected accounts.
Before now, South Korean crypto exchanges have been faced with difficulties as banks try to toe to the government’s line on crypto policing. Because of this, several banks are improving their diligence and compliance protocol since 2018.
Newsway states that “pessimism” surrounds contractual proceedings this time around with domestic exchange scene shaken by two major incidents since the last batch of six-month contracts was signed.
After stringent policies have been passed towards regulating exchanges and bank activities, the crypto companies are afraid of going into new deals because of certain history. Firstly is a significant altcoin leak in a suspected hack on Upbit. The incident ensured that only major South Korean exchange never suffered a hack.
The event was preceded by a tax authority decision to hand Bithumb a USD 67 million tax bill.
Reportedly, industry insiders believe banks consider Upbit has dealt with appropriately as the aftermath of the altcoin leak and could well be set to make a hitch-free bank contract renewal.
Amidst all these setbacks, South Korea remains the third-largest crypto exchange market by volume behind the United States and Japan. South Korean government in the second half of 2019 began working on bills that would legitimize the crypto sector and allow it to grow into an established industry.
However, passing the crypto bill in the country was trailed with several controversies surrounding the regulatory side of crypto in South Korea since 2017, alongside many future expectations for the tech.