[Asia Economy Reporter Sung Kiho] The enforcement of the revised Act on Reporting and Using Specified Financial Transaction Information (the Specified Financial Transaction Information Act, or Specified Act) is just one month away. Once the Specified Act is enforced, it will be mandatory to secure a real-name account to continue operations. However, banks are reluctant to issue real-name accounts due to the risks of money laundering and other cryptocurrency-related incidents or crimes. As a result, cryptocurrency exchanges are facing an emergency situation.
According to the financial sector and the cryptocurrency exchange industry on the 28th, the revised Specified Act and its enforcement decree, which will take effect from the 25th of next month, impose anti-money laundering obligations on cryptocurrency exchanges and require them to operate only after obtaining deposit and withdrawal accounts with real-name verification from banks.
When a bank receives an application for a real-name verified deposit and withdrawal account from a cryptocurrency exchange (virtual asset service provider), it must decide whether to issue the real-name account based on a comprehensive evaluation of the exchange’s risk level, safety, and business model. Therefore, since operations are impossible without a real-name account, banks have effectively taken on the responsibility of 'comprehensive certification' for each cryptocurrency exchange.
Moreover, financial authorities have not yet presented specific conditions or criteria necessary for banks to issue real-name accounts to exchanges. Consequently, banks are currently discussing broad frameworks such as 'common evaluation guidelines for the banking sector,' mainly through the Korea Federation of Banks, as a last resort.
The banking sector is confused due to the lack of clear standards. Meanwhile, the situation is even more urgent for cryptocurrency exchanges that must secure real-name accounts to continue their operations.
There are no exact statistics on how many cryptocurrency exchanges currently exist domestically, but industry insiders generally estimate around 100 to 120.
Among these, only four exchanges?Bithumb, Upbit, Coinone, and Korbit?have opened real-name accounts and operate with banks such as NH Nonghyup, Shinhan, and K Bank. The majority of other exchanges mediate transactions through irregular methods such as so-called 'beehive accounts' (where investors deposit into a single corporate account of the exchange).
There is a six-month grace period, so it is pointed out that by the end of September at the latest, the remaining more than 100 exchanges must also have bank real-name accounts and anti-money laundering systems in place. The existing four exchanges with real-name accounts must also undergo re-evaluation.
Accordingly, it is expected that after the six-month grace period, a significant number of small cryptocurrency exchanges will close or reduce operations, leading to a large-scale restructuring.
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