Business 2 August 2018

Dan Taylor

Failure to renew bank contract forces Bithumb to halt new account openings

One of South Korea’s biggest cryptocurrency exchanges has said it will stop issuing new real-name accounts from August, following its failure to reach an agreement on a contract renewal with NH Nonghyup Bank.

Bithumb has reportedly said it will stop issuing new real-name accounts from August 1 on a temporary basis, according to Business Korea. This will not affect customers who already have real-name accounts with the broker.

Bithumb had previously worked with Shinhan Bank, but had opted to renew its agreement with rival NH Nonghyup Bank. However, according to reports emerging this week, the deal fell through on the insistence of the bank, who said they decided not to agree the renewal.

“We have decided not to renew the contract because Bithumb still has problems in protecting consumers and information and preventing money laundering,” said a representative from the bank, commenting on the deal.

The bank’s decision comes in the wake of a recent high profile hack at Bithumb, where as much as KRW18.9 billion (US$16.88 million) worth of cryptocurrencies were lost to the attack.

In attempting to resolve the standoff, Bithumb has said that they will work with Nonghyup Bank to ‘iron out’ the remaining obstacles to resume issuing new virtual accounts in the near future, saying, “We have a consensus with Nonghyup Bank on renewal of the contract. We are planning to iron out our different views on some legal expressions and start issuing virtual accounts soon.”

The development will be costly for Bithumb, not to mention embarrassing. As one of Korea’s big four exchanges, it is the only company in its tier that haven’t renewed with a commercial banking partner.

The renewal process was instigated by the South Korean government, following sweeping changes to cryptocurrency laws back in January. As well as mandating real-name accounts, the measures also require exchanges like Bithumb to renew service contracts with banking partners on a semi-annual basis as part of protective measures against money laundering.

While the halt in issuing accounts will have no bearing on existing customers, it remains to be seen whether Bithumb can reach the agreement it needs to resume full operations any time soon. For the time being, Bithumb remains the only one of the big four unable to offer real-name accounts to new clients.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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