Commissioner of South Korea’s Financial Services Commission (FSC), Choi Jong-Ku, has acknowledged there are no issues regarding security and compliance in the process of banks offering virtual bank accounts to Korean cryptocurrency exchanges.
Commissioner Choi noted that as long as crypto trading platforms employ functional Know Your Customer (KYC) and Anti-Money Laundering (AML) systems, the country’s commercial financial institutions will be able to provide banking services to digital asset platforms. Choi made these remarks during the state affairs audit performed by the South Korean government to asses the progress of all government agencies and commissioners in the nation.
“There exists no issue in banks providing virtual bank accounts to cryptocurrency exchanges. If digital asset trading platforms have KYC and AML systems in place, there is no problem in issuing virtual bank accounts to exchanges,”
, said Commissioner Choi.
South Korean crypto exchanges are using a unique system called virtual bank accounts which allow users to store and withdraw the South Korean won instantly, so they are able to securely hold KRW in exchanges.
The government of South Korea prompted banks to prevent working with crypto exchanges to remove the possibility of money laundering through digital assets at the start of 2018.
Nonghyup, a South Korean commercial bank, kept working with crypto exchanges for over a year and continued to do so even after the government’s prompt. Nevertheless, in mid-2018 the bank was compelled to end its services to crypto exchanges, including major ones such as Bithumb.
Commissioner Choi’s public statement brings light into the local authorities and government’s stance regarding cryptocurrency exchanges. It also shows that in the future, Korean crypto trading platforms will finally have access to banking services from the country’s major financial institutions.
South Korean Blockchain Association has shown its optimism regarding FSC’s new stance on crypto and also added that the original KYC and AML issue brought up by the FSC at the beginning of 2018 has been fixed.
Also, the association along with Korea’s major cryptocurrency exchanges have launched the procedures to obtain insurance for protecting investor funds. This was done in regards to the concerns of local financial authorities and the FSC concerning security breaches.
Several large crypto exchange platforms such as Bithumb, Coinone, Upbit, Korbit, and Gopax have recently been approved by the South Korean government for having proper security measures and internal management systems.