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| Prices of cryptocurrencies traded at Coinone are shown on an electronic board at its customer center in Seoul, on Aug. 25. Yonhap |
By Lee Min-hyung
Shinhan Bank and NongHyup Bank decided Wednesday to extend their contracts with local cryptocurrency exchanges, after verifying the exchanges' bolstered efforts to maintain anti-money laundering protocols.
Upbit, the nation's largest crypto exchange, had so far been the only company which reported its business to the Financial Services Commission (FSC) after renewing its contract recently with K bank.
The financial transaction act here stipulates that any exchange must report its business activities to the Korea Financial Intelligence Unit, a sub-organization under the FSC, by Sept. 24 after signing or extending a partnership with a local commercial bank on their issuance of real-name bank accounts for their exchange customers.
Three other major exchanges ― Bithumb, Coinone and Korbit ― were also expected to follow in the footsteps of Upbit after they come to terms with their affiliated banks. Shinhan extended its partnership with Korbit, and NongHyup announced its contract extensions with two exchanges ― Bithumb and Coinone ― on the same day.
With the looming deadline for receiving a license to keep their platforms running, all eyes had been on whether the three major exchanges would be able to remain among the big four exchanges along with Upbit.
Both lenders confirmed that they extended the contracts with their affiliated exchanges, after finishing on-site inspections of the exchanges' risk management capability.
"We extended our contract with Korbit," a spokesman at Shinhan said.
This is expected to clear away any monopolistic concerns surrounding Upbit, but the fates of smaller exchanges remain murky.
"Fears of mass shutdowns of minor exchanges loom larger, as they will have a hard time finding a partner in the bank industry," an industry source said. The financial authority estimates there are about 60 exchanges operating trading platforms for crypto assets in Korea. "The authority is on track to restructure the industry with toughened regulations, and small exchanges will not be able to endure the watchdog's pressure in the end."
FSC Chairman Koh Seung-beom, who recently took office, also shared his negative view of the burgeoning crypto market. He said recently that "it is hard to view cryptocurrency as a financial asset."
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