Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Banking industry moving to curb crypto craze
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By Lee Min-hyung
By Lee Min-hyung
The nation's banking industry is moving to curb the cryptocurrency craze by adopting a series of restrictive measures targeting foreigners.
Starting May 21, KB Kookmin Bank will block foreigners and non-Korean residents from transferring more than $10,000 (11.29 million won) to other countries in one month. This is a toughened measure from its earlier decision that placed the upper limit on daily overseas remittance at $10,000.
The restriction came amid escalating concerns over the speculative nature of digital currencies, with many foreign investors seeking to generate gains by taking advantage of bitcoin arbitrage.
The strategy is more widely known as the “kimchi premium” here through which a growing number of foreign investors buy cryptocurrencies in non-Korea-based exchanges and sell them in Korea where the price of bitcoin is relatively higher than in other markets.
Korean banks are expected to keep introducing more restrictive measures against such speculative cryptocurrency transactions.
Other major banks ― such as Shinhan, Woori and NongHyup ― have also decided to reinforce the remittance restriction, in a preemptive step against possible money laundering through cryptocurrencies.
Last month, Shinhan Bank and Woori Bank blocked foreigners and non-Korean residents from making overseas remittances totaling over $10,000 a month. NongHyup Bank also made a similar move in mid-May.
“Banks will keep tightening monitoring for any illegal or suspicious signs of overseas remittance at a time when few regulatory guidelines have been confirmed,” a bank industry source said.
Banks are also issuing repeated warnings to their employees not to engage in cryptocurrency transactions during work hours.
KB, Woori and Hana sent that warning to all their employees, as well as urging them to refrain from investing in cryptocurrencies or boasting about their gains from digital currency investments, as this is not good for the morale of other employees.
Under the work ethic notification, KB has disallowed its employees from engaging in any profit-taking activities during work hours. Woori also advised employees not to brag about their investment gains, as this aggravates the feelings of other workers.
“What appears to be reckless cryptocurrency investment particularly in young age groups has become a social issue in banking as well as other industries, but it is realistically impossible for them to curb trading by each employee,” another bank industry source said.
“The super-volatile nature of cryptocurrencies makes people get addicted to checking prices of digital assets in real time,” the official said. “Companies have no choice but to keep notifying employees to refrain from trading digital currencies while they are in the office.”
The lack of supervision of cryptocurrency transactions is adding more confusion to the burgeoning crypto market here.
“Cryptocurrency investors are exposed to possible risks due to the absence of a government control tower handling the aftermath of any possible financial incidents regarding digital asset transactions,” the official said.
Reflecting on the escalating woes regarding the overheated crypto industry, Prime Minister Kim Boo-kyum recently said the government would soon designate a competent authority to handle the issue and take steps to ensure the transparency of cryptocurrency transactions.