Banks phasing out virtual accounts
Card issuers working together to block overseas transactions
By Kim Yoo-chul
Shinhan and other Korean banks plan to phase out virtual currency accounts in line with the government’s moves to take the heat out of the overheating cryptocurrency market.
Shinban Bank, the nation’s biggest bank by assets, said Friday it will not introduce a real-name verification service designed to allow deposits and withdrawals from real-name virtual bank accounts.
This means the bank will not allow the opening of accounts for transactions of virtual currencies, regardless of whether they are opened under real names or aliases.
“We’ve developed a system to introduce identifying virtual account customers in accordance with the government’s efforts to curb the cryptocurrency craze. However, we decided to scrap the service enabling the trade of digital tokens which has become a serious social issue,” an official from Shinhan Bank said.
The government said last month it will require banks to verify the identities of customers opening crypto-trading accounts before they can make deposits or withdrawals.
“Now, it doesn’t matter whether or not an investor passed through the verification process. We are not going to allow the opening of virtual accounts for cryptocurrency trading,” another Shinhan official said.
The bank also said it has notified the country’s three biggest virtual currency operators including Bithumb to file plans for closing existing virtual accounts opened at the bank.
“Starting Jan. 15, investors can’t deposit money with their exiting virtual accounts. Shinhan will allow investors to transfer or withdraw money from virtual accounts to individual bank accounts,” the official said. “This is to terminate contracts with cryptocurrency exchange operators.”
The Industrial Bank of Korea (IBK) has also decided to close its virtual trading accounts as it has no plans to introduce a real-name verification process system.
KEB-Hana said it has yet to decide its position on the cryptocurrency accounts.
Those plans are expected to enforce cryptocurrency operators to have individual virtual accounts under their corporate accounts, or else the operators have to transfer all investors’ money to banks that provide identification-checking virtual account services.
“Given the difficulty in managing accounts, these can’t be options to keep cryptocurrency trading alive,” an official at IBK said.
The Credit Finance Association (CFA), the lobby group representing interests of Korean card issuers, said eight credit card companies are working together to introduce systems blocking transactions by investors for the purchase of digital tokens from overseas virtual currency exchanges using either debit or credit cards.
“If you hold either a Visa or Master card, then you can purchase digital tokens on overseas cryptocurrency exchanges. But according to the government ongoing stance, we are developing systems not to allow local investors to buy such tokens using domestically issued debit or credit cards,” an official at Samsung Card said.
Cryptocurrency exchange operators said they will introduce plans to protect investors.
"We will guide investors to transfer their money to other banks that provide virtual account services. NH Nonghyup Bank is one of ours,” an official at Bithumb said without elaborating further.