FSC spurns banks’ request for exemption in cryptocurrency trading partnerships – Korea Times

fsc-spurns-banks’-request-for-exemption-in-cryptocurrency-trading-partnerships-–-korea-times
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By Anna J. Park



Local cryptocurrency exchanges now face the hurdle of ensuring their users operate real-name accounts at banks they have established partnerships with, a pre-requisite that must be in place by the end of September in order for them to be eligible for government registration to continue in operation.



According to the banking industry, the financial authorities rejected a request by the Korea Federation of Banks (KFB) ― an association of local banks ― which asked the government to exempt them from blame if trading anomalies occur at cryptocurrency exchanges. Banks are seeking an addendum that would exempt them, unless they displayed gross negligence, if financial crimes, such as money laundering are detected.



Following the rejection, many local exchanges that haven’t formed a partnership with banks face the imminent threat of closure come September. This has led to criticism of the financial authorities for trying to pass the buck on to the banks, instead of seriously looking at the country’s cryptocurrency trading system to enact effective regulatory measures.



Financial Services Commission (FSC) Chairman Eun Sung-soo reiterated the financial regulator’s position that banks hold the primary responsibility, in the event of money laundering via cryptocurrency exchanges.



“If banks don’t think they can handle this, then they shouldn’t have partnerships with the cryptocurrency exchanges that their customers are using. If they can, then they should form partnerships with local exchanges,” Eun said earlier this month at a parliamentary committee meeting.



“If they cannot handle the results, they shouldn’t be in the banking business,” he bluntly added.



According to the revision of the Act on Reporting and Using Specified Financial Transaction Information, local cryptocurrency exchanges must officially register their businesses by September 24 in order to obtain a government license to continue their operations. As one of the key requirements for registration is to verify exchange users’ real-name bank accounts, most exchanges are now facing the risk of closure if banks reject partnering with them. Only four exchanges ― Upbit, Bithumb, Korbit and Coinone ― have partnerships with banks to verify their customers’ real-name banking accounts.



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