South Korea’s anti-money laundering policy directs crypto exchanges to have form partnerships with banks, for the approval of their name by Sept.24th. As result crypto exchanges have paid $14.7M to Korean Banks for the verification of their names. The verification services have doubled the second-quarter profit to 16.97 won ((US$14.7 million), the Yonhap News Agency reported.
Previously the numbers were7.55 billion won ($6.5 million) in the first quarter, Yonhap said, citing a Korean financial watchdog. The trend indicates that private investors and technology experts are stilling active despite the country’s weak crypto market. The agency also said that Korea’s Korea’s biggest crypto trading platform, Upbit, recently paid 12.07 billion won ($10.5 million) to online bank K-bank.
On the other hand, the majority of the private investors named the anti-money laundering policy as a burden on their shoulders. They also said that the government’s law enforcement authorities have left investors with no choice but to pay, in case, any other scenario investors would invest in other countries.
The involvement of banks in this pattern is a step made by the Korean Government to control the crypto industry. Recently two other crypto exchanges Bithumb and Coinone have secured contracts with agricultural bank Nonghyup Bank, and Korbit with Shinhan Bank.
Trades have until Sept. 24 to enroll with Korea’s Financial Intelligence Unit or be closed down. To enroll, they should satisfy certain prerequisites, incorporating associations with banks for genuine name enlistment and endorsement for their “know-your-client” measures.
As of now, it is clear that approval of the country’s new anti-money laundering policy has left crypto exchanges with no options. South Korean regulations have succumbed to the scope of crypto trading in the country. As a result of these uncertainties and regulation immaturity, global crypto exchanges have discontinued their services in the country.
However, major banks are also reluctant to partner with crypto exchanges as these services can put banks into accountability. Banking experts have argued that the rampant popularity of crypto trading is an encouraging sign, but it has also encouraged cyber criminals to be more proactive than in the past. Since Banks and crypto exchanges have developed strategic ties, cybercriminals can launch hacking attacks. It seems that the banking sector is afraid of the risks associated with digital technologies.
Cybercriminals are quickly on their toes to dig deep to take advantage of the emergence of digital technologies. The volume of digital trade has increased over the years, so does online hacking attacks. Digital scams are a primary concern for more than half of the world’s financial institutions. South Korean banks are also concerned about the possible security breaches regarding the crypto marketplace. However, the development of digital media events will further raise these concerns.