Korean banks are conflicted on whether to form alliances with local cryptocurrency exchanges in the middle of strict financial regulations. Currently, three Korean commercial lenders – Shinhan, K bank, and NongHyup have formed partnerships with major crypto exchanges. This move will enable exchanges to handle transactions stably as this will allow customers to trade digital currencies via real-name bank accounts provided by the associated banks.
There is a special act on financial information which is making major lenders such as KB, Hana, and Woori cautious of signing crypto partnerships.
The Act’s main objective is to ensure that financial transactions such as foreign-exchange transactions, promote the curbing of criminal acts and starting of a healthy and open financial system, provide for reporting and the use of the specific details needed to manage money laundering and terrorism finance. The exchanges cannot function without protecting the users’ real- name, bank accounts, the Act accentuates. After a six month grace period, the Act shall enter into force.
Industry officials claim that the Banks’ risk of suddenly shifting their position on such alliances is still slim because of Bitcoin’s new craze.
Korean Institutions are Wary of new Crypto act
The creditors are cautious of executing the Act since banks may face harder sanctions if their associated exchanges raise any security concerns the industry source reports. According to the Financial Services Commission, banks will issue real-name trading accounts to see if their potential partner trading is sufficiently reliable concerning protection.
Under the guidelines on money laundering, banks must take more reliability for potential cyber-attacks and other financial incidents if exposed to their associated exchanges.
Lenders will have to wait for a couple of months before they can resume their trade relationships.
To push the implementation of the proposed crypto income tax in South Korea until January 2022, the National Assembly of South Korea requested a pause in the crypto tax law.