S Korean Regulator to Banks: Stop Grumbling About Crypto Market Risk
A leading South Korean regulatory chief has repeated calls for banks to stop complaining about absorbing crypto exchange-related risks and accept that any partnerships they undertake with trading platforms must be done so at their own peril.
As previously reported, banks in South Korea have stated with increasing certainty that they think only four trading platforms – almost certainly the “big four” of Upbit, Bithumb, Korbit and Coinone will beat a government-imposed September 24 deadline. After this date, all crypto exchanges will need to register with the Financial Services Commission (FSC), adopt anti-money laundering (AML) protocols, obtain data security management accreditation and find banking partners who offer wallet-liked, real-name authenticated fiat on/off ramp accounts if they want to keep operating.
Banks have called on regulators to soften their stance after the FSC said that banks would be made to undertake 100% of the risk involved with taking on an exchange client. That would in effect mean that should an AML violation take place on a partner exchange, the bank would be held accountable, and the same could also be true of a hack or a case of fraud.
Banks claim that exchanges themselves should be made to accept blame, or that another solution should be found – claiming that their overseas business could be placed under threat should AML violations be detected on partner exchanges. Concerns such as these have led to a growing number of major banks simply ruling out the notion of partnering with trading platforms. So far, Woori, KEB Hana, Kookmin and BNK Busan have claimed they will not consider crypto-related business – leaving only Shinhan, NongHyup and K-Bank yet to comment.
The soon-to-be-launched Toss Bank has also been coy on the matter of crypto banking partnerships.
And the FSC chairman Eun Sang-soo has asked banks to stop talking about the matter. After earlier this month stating that “it would be good for banks to stop bringing up this matter,” Eun yesterday doubled down on the sentiment.
KBS quoted Eun as stating:
“If casinos are suspected of money laundering, [banks] are required to report this matter to the [regulatory] Financial Intelligence Unit. Banks have all accepted this, so why are they still just talking about crytpoassets?”
Eun added banks should not complain about being burdened with responsibility for exchanges, adding that managing risk was “the job of the banking [sector].”
Meanwhile, after the ruling Democratic Party said earlier this week that it was considering a measure that would see a 20% levy on crypto trading profits delayed, a second proposal to delay the tax to 2023 is set to hit the National Assembly.
Another MP – this time a ruling party MP – has launched a private member’s bill in a bid to postpone the introduction of the tax, meaning that traders would be able to continue to operate tax-free until well after the next general election.
Per Newsis, the MP in question, Noh Woong-rae, stated that the move would “ease the burden” on crypto investors and would “support more stable growth in the cryptoasset market,” which he added, “is only in its infancy.”
Another bill, from an opposition MP, has already been put before the house, with the Democratic Party’s new crypto taskforce claiming that it was discussing adding its support to the motion. Consolidating the bill with Noh’s measure could potentially help the party save face – and drive up cross-party support.
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