South Korean banks have received a temporary extension to review issuance contracts related to major cryptocurrency exchanges.
Banks in South Korea have been granted a temporary extension concerning a contract relating to four crypto exchanges issuing real name verification accounts. These banks have signed these contracts for know your customer and anti-money laundering (KYC/AML) purposes, tagging real names to users on those crypto exchanges. The new deadline for this reporting on crypto exchanges has now been moved to Sept. 24.
Local media outlet Yonhap News Agency first reported the news, saying that banks have become more burdened and, as a result, are unwilling to extend existing contracts. The four exchanges in question are Upbit, Bithumb, Coinone, and Korbit. The NH Nonghyup Bank and Shinhan Bank are two banks that have decided to extend the issuance contract with these exchanges.
The two aforementioned banks are currently evaluating these exchanges, but it appears likely that these will be approved, going by the statements in the report. Exchanges that fail to have this Financial Information Analysis (FIU) report, as it is known, by September 24 will have to close down.
Exchanges are currently in the midst of experiencing heavy oversight from financial authorities, who wish to protect investors and prevent criminal activity. To that end, they have conducted an extensive look into the market and have put some stringent measures in place.
South Korean regulators target crypto exchanges
South Korea’s financial authorities are taking the notion of regulation very seriously, as proven by recent decisions and announcements. The primary concerns laid out by these regulators are those related to money laundering, the financing of illegal activity, market manipulation, and investor protection.
These are the concerns that other governments have also discussed, but South Korea is among the most proactive in terms of regulation. The country has already banned privacy coins and implemented a stringent taxation rule, which most citizens agree with.
Crypto exchanges, however, are the biggest target of regulators. Officials released a new regulatory guideline for exchanges, which they must meet if they wish to receive a license that deems them fully regulated. The first such exchange is likely to arrive in the third quarter of 2021.
Exchanges have to agree with the new rules, failing which they will have no choice but to shut down. Some insiders and analysts have decried the sea change that is occurring in the market, saying that it will hurt business. But regulators seem firm in their judgment.
South Korea is a strong market for cryptocurrencies, so it will likely have to adjust to the new conditions. It may even be the case that other nations, like the U.S., follow suit. The U.S. appears to be forming its own regulatory framework, going by recent statements made by officials.