Korea’s all top 4 crypto exchanges now have bank backing to meet new rules

2021.09.09 09:36:47 | 2021.09.09 09:38:23

[Photo by Lee Seung-hwan]이미지 확대

[Photo by Lee Seung-hwan]

South Korea’s all top four cryptocurrency exchanges are expected to operate normal after the Sept. 24 registration deadline as the three smaller players have finally succeeded in extending real-name account service contracts with their bank partners.

NH Nonghyup Wednesday agreed to extend such contracts with Bithumb and Coinone, the country’s second and third-largest cryptocurrency exchanges, for another six months, allowing them to file for registration with the Financial Intelligence Unit (FIU) to continue operation. Korbit, the fourth largest player, won a consent from Shinhan Bank on the same day with their contract details to be announced later.

Since recently, Upbit, the largest cryptocurrency exchange by the number of subscribers and transactions in Korea, was the only exchange in Korea that has successfully renewed its contract with its bank partner, K Bank, for real-name account service and completed registration with the FIU.

Under the new anti-money laundering rule, platforms serving won-denominated trade in digital tokens must register with the FIU by Sept. 24 for business continuation. To register, an exchange must be able to provide real-name accounts backed by commercial banks as well as state certification in their information security system. An exchange that fails to register in time will be prohibited from digital coin trading in Korean currency.

NH Nonghyup said it decided to issue a real-name account confirmation to Bithumb and Coinone on the condition the exchanges should implement a solution to prevent money laundering between exchanges.

The bank also agreed to set a grace period before the implementation of a “travel rule” system, a regulation that requires a sending exchange to provide sender and receiver information to a receiving exchange when their assets are moved from one exchange to another.

The three exchanges plan to apply for registration with the FIU under the Financial Services Commission this week.

Cryptocurrency exchanges operating in South Korea must alert users of business closure by no later than Sept. 17 after they go out of business due to noncompliance with the new rule.

By Yoon Won-sup and Minu Kim

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]