South Korean government introduces new regulation on Bitcoin (BTC) and crypto
The South Korean government has announced new financial regulations regarding cryptocurrencies. Feeling their existence threatened by this change, several exchange companies decided to file a complaint against the state, which seems to have placed their whole industry into the banks’ hands.
An illegitimate transfer of responsibility?
The new regulations pushed through by South Korea’s Financial Services Commission (FSC) are sowing doubt among small cryptocurrency exchange platforms. The reforms requires them to open a bank account in their name by 24th September 2021. This may spell the end of operations, according to them.
The fact is that the national banks have no desire to carry the risk of exchanges, and are only offering accounts to the four major platforms in the country. They will be able to refuse access to part of their services to users of digital currencies who have not carried out identity verification in particular.
A report by Business Korea highlights small crypto exchanges’ plans to take the government to court for its failure to accept its responsibilities. With the help of the country’s financial authorities, the state has transferred much of its responsibility for verifying crypto exchanges to the banks.
A state blunder quickly sanctioned
However, pressure is likely to come from all sides for the South Korean Government. Already, the Korean Federation of Banks and some lenders are demanding that it change these new rules, as they too fear possible financial crimes related to crypto transactions.
On the sidelines of a meeting of some twenty Korean companies and the financial intelligence arm of the FSC, the filing of a constitutional appeal may be mooted. In the background, they all chose to denounce this delegation of responsibility, which could have enabled the sector to be properly regulated and best practices to be guaranteed.
For now, K Bank, Shinhan Bank and NH Bank may have carte blanche to verify the transactions of big names in the Korean crypto industry like Korbit, UPbit, Coinone and Bithumb. However, they refuse to take a look at the less famous platforms.
One thing is certain: small crypto operators in South Korea feel aggrieved at this new regulation. Not only are they being asked to pay astronomical sums in order to be able to work with the banks, but the government’s intention to abandon them seems obvious.
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