'Their Own Feast'... Cryptocurrency Real-Name Accounts and Bank Fee Income Double 'Jump'

Number of Real-Name Verification Accounts at the End of June: 6,768,078
Double the Level at the End of March
Banking Sector Fee Income in Q2: 16.97 Billion Won
More Than Twice the 7.055 Billion Won in Q1

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Park Sun-mi] It has been confirmed that the number of real-name accounts and related fee income from three banks maintaining contractual relationships with four cryptocurrency exchanges have doubled in three months. However, most cryptocurrency exchanges that fail to secure real-name verification accounts by next month are expected to be shut down, indicating that banks’ fee income will likely face limitations in the future.

According to data received on the 10th from the Financial Supervisory Service by Yoon Chang-hyun, a member of the National Assembly’s Political Affairs Committee from the People Power Party, the number of real-name verification accounts held by three banks?K Bank, NH Nonghyup Bank, and Shinhan Bank?trading with cryptocurrency exchanges reached 6,768,078 as of the end of June. This exceeds five times the 1,336,425 accounts at the end of last year and has doubled compared to 3,796,953 accounts at the end of March this year.

The deposits related to real-name accounts of the four major cryptocurrency exchanges?Upbit, Bithumb, Coinone, and Korbit?that maintain contractual relationships with banks exceed 7 trillion won. This amount has also increased more than fourfold compared to 1.75 trillion won at the end of last year and has grown by nearly 30% compared to 5.91 trillion won at the end of March this year.

Despite the cryptocurrency market showing instability in the second quarter, such as a sharp drop in Bitcoin prices, investors have continued to trade actively, resulting in a rapid increase in both the number of real-name accounts and deposits in the banking sector for the four major cryptocurrency exchanges. Consequently, the fee income from accounts held by the contracted banks has also ballooned.

Bank Fees from Cryptocurrency Exchanges in Q2 Reach 16.9 Billion Won... Double Q1

The fee income earned by the three banks from providing real-name verification accounts to the four cryptocurrency exchanges amounted to 16.97 billion won from April to June. This is more than double the 7.055 billion won earned in the first quarter. By bank, K Bank, which has a contract with Upbit, recorded the largest fee income of 12.07 billion won. Nonghyup Bank received 3.103 billion won and 1.454 billion won from Bithumb and Coinone, respectively. Shinhan Bank earned 343 million won in the second quarter through transactions with Korbit.

By the 24th of next month, cryptocurrency exchanges supporting Korean won transactions must meet requirements such as Information Security Management System (ISMS) certification and securing real-name accounts to report to the Financial Services Commission before the expiration of the grace period under the Act on Reporting and Using Specified Financial Transaction Information (Special Financial Information Act). Since the financial authorities firmly rejected the ‘immunity privilege’ demanded by commercial banks last month, despite the expansion of fee income from real-name accounts, additional negotiations for issuing real-name accounts between exchanges and banks have not progressed, making mass closures of exchanges inevitable.

In the political sphere, voices are gaining strength to extend the issuance conditions for real-name accounts for cryptocurrency exchanges by six months until the end of March next year to minimize consumer damage caused by the mass closure of cryptocurrency exchanges.

People Power Party lawmakers Jo Myung-hee and Yoon Chang-hyun recently proposed amendments to the Special Financial Information Act aimed at extending the grace period for cryptocurrency exchange registration. Lawmaker Yoon stated, "Compared to the beginning of the year, the number of accounts has increased fivefold, and deposit balances have quadrupled, indicating that the coin craze has not ended. We must stabilize the expanded market by enhancing user protection for coin exchanges and ensuring transparent operations regarding listings and deregistrations."