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Banks backtrack on cryptocurrency accounts

Jan 15,2018
Banks reversed their policies on accounts for cryptocurrency exchanges over the weekend, saying that they will stick to their initial plans to allow clients to open accounts for cryptocurrency transactions using their real names within the month.

The country’s financial regulator has pushed banks to stop opening new accounts until they establish a way to verify that the accounts bear the real name of the customer, to prevent money laundering.

The Financial Services Commission said Sunday that the banks will open new accounts after it releases guidelines about avoiding money laundering.

“The Financial Services Commission is going to carry out on-site inspections of six banks,” said a spokesperson for the Financial Services Commission.

“The schedule has been delayed somewhat through January 16, and after the monitoring, the Financial Services Commission will release the anti-money laundering guidelines.” The six banks - KB Kookmin, Shinhan, Woori, KEB Hana, Industrial Bank of Korea and Korea Development Bank - will be able to meet the requirements by the end of this month.

This is a reversal of the news Friday that Shinhan Bank and the Industrial Bank of Korea would put the opening of new accounts on hold.

Instead, Shinhan Bank notified major local cryptocurrency exchanges such as Bithumb and Korbit that they should come up with measures to get rid of existing anonymous accounts.

The flip-flopping reflects the puzzle facing the country’s government and regulators over what to do with an out-of-control cryptocurrency craze.

After news reports came out about Shinhan’s suspension of new account openings Friday morning, some Shinhan users - possibly bitcoin traders - threatened a boycott of the bank.

The angry response from customers prompted the banks to reverse their position on new accounts.

Still, the unregulated nature of cryptocurrencies raised concerns on a range of issues from money laundering, fraud, identity theft and the surprisingly heavy interest in the trading by teenagers, prompting the government to do something.

The Credit Finance Association, a group representing credit card companies, said last week that it will work toward banning customers from purchasing cryptocurrencies overseas using locally issued cards.

Minister of Justice Park Sang-ki upped the ante earlier last week, saying that his ministry was preparing a bill to prohibit digital currency trading through exchanges, without elaborating on the timing.

Those remarks triggered anger from cryptocurrency investors, and over 160,000 people signed a petition asking the Blue House to halt the crackdown on cryptocurrency trading. If the number of petitioners surpasses 200,000, the government is supposed to address the issue.

But there are also skeptics of Korea’s infatuation with cryptocurrencies.

A research firm called the Korea Society Opinion Institute found that 69.7 percent of 1,033 respondents approve of government regulations on cryptocurrency trading.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr ]


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