Another Crypto Exchange's Victory in Banking Battle
South Korean Blockchain community leaders have welcomed a Seoul district court’s decision to overturn a banking ban on exchange platform Coinis.
Nonghyup (NH) Bank, one of the country’s largest commercial banks, last month decided to end its banking partnership with Coinis, a medium-sized exchange with a relatively large client base that has been in operation since May 2015.
NH had decided to stop Coinis from processing all deposits and withdrawals, in a move the exchange’s CEO considered to be arbitrary. Coinis thus filed a suit claiming NH was in breach of contract, adding that the bank did not sufficient evidence to support its decision, and that its actions amounted to a restriction of trade.
To the surprise of many observers, the judge ruled in favor of Coinis, stating that NH’s decision had not been made in accordance of the Financial Services Commission’s guidelines on cryptocurrency-related anti-money laundering measures.
Media outlet CIO Biz quoted Yeon Sam-heum, the head of the Korea Block Chain Industry Association (KBCIA), as stating, “This is a crucial decision that will boost the growth and sustainability of the industry as a whole. It could well prove to be a turning point.” Yeon said that the industry needed more champions like Coinis, who were prepared to fight tooth and nail for their legal rights.
Coinis’ lawyer, meanwhile, noted that the ruling would force banks in the country to think twice before attempting to end legally binding contracts with exchanges.
However, similar problems are challenging other players within the cryptoverse, also.
Battles all over the world
In August, Bithumb, one of South Korea’s largest cryptocurrency exchanges, temporarily stopped accepting applications for new authenticated accounts in its home country, as it failed to agree with the same NH Bank.
Meanwhile, banks in Panama, which is one of the Top 20 countries by crypto ATMs per capita, appear to be refusing cryptocurrency transactions, per media reports, sparking fears that a crackdown has begun.
In September, news outlets in Vietnam were claiming commercial banks have decided to discontinue cryptocurrency-related business at the behest of the country’s central bank.
However, this year there were many examples that showed that legal battles with banks can be won by the crypto companies. For example, in May, Zimbabwean cryptocurrency exchange Bitfinance was allowed resume its business after the High Court of Zimbabwe reversed the decision of the country’s central bank to restrict cryptocurrency-related operations in the country. In April, Chilean cryptocurrency exchange platform Buda has scored a victory in its legal battle with two of the country’s biggest banks.
In either case, according to some experts, legal battles may not be the best way to build a new financial system. For example, Dong He, deputy director of the International Monetary Fund’s Monetary and Capital Markets Department, suggested that since crypto may become a serious contender for putting banks out of business, they should forestall this by adopting some of the concepts.
Meanwhile, Alexis Roussel is the CEO and co-founder of Bity, a Swiss crypto-finance services provider, wrote in a recent article on Cryptonews.com that without the synchronization of the old and new financial systems, current financial providers are just delaying inevitable transformation, and may be left behind as the new digital economy is built around them.