South Korean banks have backtracked from their decisions to stop servicing cryptocurrency accounts as crypto investors protested and the government re-discussed its policy. The country’s 6 major banks have been told that they must follow through with the original plan and install the system that would end the anonymous trading of cryptocurrencies.
Also read: South Korea Urges 23 Countries, EU, and IMF to Collaborate on Curbing Crypto Trading
Banks U-Turned
South Korean banks have reportedly reversed their decisions to stop servicing cryptocurrency accounts. “They will stick to their initial plans to allow clients to open accounts for cryptocurrency transactions using their real names within the month,” Korea Joongang Daily reported.
The original plan has been for banks to stop issuing virtual accounts and install the new government-mandated, real-name identification system. From that point on, they would only issue real name accounts. This new system is expected to be introduced around January 20.
The news outlet detailed:
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.
Last week, the regulators began inspecting the country’s 6 major banks to ensure they have fulfilled their anti-money laundering (AML) obligations with regard to virtual account services, as news.Bitcoin.com reported.
While the inspections will not conclude until January 16, some banks decided to pull out of servicing cryptocurrency accounts “due to strong pressure from financial authorities” and criticism that “banks are supporting virtual currency transactions,” Money Today described.
The regulators then informed the 6 banks that their decisions regarding whether to service crypto accounts do not have any bearing on their obligations to install the new real-name system. As such, banks agreed to install the new system as planned. The Korean Financial Services Commission (FSC) said Sunday, as reported by Korea Joongang Daily:
Banks will open new accounts after it [FSC] releases guidelines about avoiding money laundering.
Shinhan Bows to Investor Complaints
Among the banks that decided to stop servicing cryptocurrency accounts was Shinhan Bank. A letter regarding this decision was immediately sent to the crypto exchanges currently using the bank’s virtual account services, including the country’s largest exchange Bithumb.
Following the bank’s announcement, “some Shinhan users – possibly bitcoin traders – threatened a boycott of the bank,” the publication noted. Yonhap elaborated:
After the news was announced, investors rebelled and the financial authorities decided to re-discuss the policy when they asked for a real-name confirmation service.
Shinhan Bank subsequently reversed its decision, stating that the bank will review its virtual account opening policy and “will allow deposits to existing virtual accounts for the time being,” the news outlet detailed.
Korea Joongang Daily added, “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.”
While it remains possible for Shinhan Bank users to deposit into existing virtual accounts, the government announced on Sunday that anyone doing so would face a fine once the real-name system is implemented.
What do you think of banks reversing their decisions on crypto accounts? Let us know in the comments section below.
Images courtesy of Shutterstock and Shinhan Bank.
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