Seoul financial authorities probe banks on bitcoin asset services

2018.01.08 13:13:00

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After banning anonymous accounts in cryptocurrencies to prevent fraud and other harms from virtual money trade, South Korea’s financial authorities are carrying out joint special probe into commercial banks in their digital wallet services to cryptocurrency exchanges.

The Financial Intelligence Unit (FIU) under Financial Services Commission (FSC) that mostly supervises money laundering and other illicit financial transactions and the regulatory authority Financial Supervisory Service (FSS) said they will launch a rare joint investigation on six leading banks Woori Bank, Kookmin Bank, Shinhan Bank, NongHyup Bank, Industrial Bank of Korea, and Korea Development Bank - in their services of connecting bank accounts to bitcoin assets. The probe would run till Thursday.

A senior official from the FSC said that the inspection will be on lenders’ virtual account services. Virtual accounts are affiliated to corporate accounts opened by digital currency exchanges and allow investors trading cryptocurrencies to put and withdraw money.

As of last month, the number of virtual accounts managed by six lenders came to 111 with combined deposited balance estimated at about 2 trillion won ($1.9 billion). The FIU and FSS will carry out an intensive probe into these virtual currencies and monitor whether financial institutions fully obliged with regulations in issuing accounts to anonymous holders.

Concerned by the frantic engrossment with Bitcoin and other cryptocurrencies, the government banned mainstream lenders from issuing new virtual currency accounts in anonymous names.

The Korean government said that it will introduce tougher measures such as putting a cap on per individual’s trading volume and warned it could go as far as closing down exchanges if speculation goes overboard.

The domestic market - home to the world’s largest trade in the virtual money - remains unfazed by the slew of government measures to cool the market. By Monday noon, Bitcoin fetched 24.4 million won on the Bithumb, down 1.4 percent from Friday after hitting over 25 million won upon news that Facebook CEO Mark Zuckerberg was exploring application of cryptocurrency onto Facebook services.

By Kim Tae-sung and Lee Eun-joo

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