Business 22 February 2018

Erik Gibbs

South Korea opens arms to ‘normal’ crypto transactions

In it’s on again, off again relationship with cryptocurrencies, South Korean is on again. Fortunately, they’ve been more consistent lately, showing positive support for the community. Now, the director of the South Korean Financial Supervisory Service (FSS), Choi Heung-sik, has publicly announced that the government will support what it deems are “normal” cryptocurrency transactions.

“The whole world is in the process of reconsidering to find framework for virtual currency, and that we should make it a normal transaction instead of strengthening regulation,” Choi said. The position counters his earlier remarks from last month calling for tighter regulations. When he made the comment in January, he also said that cryptocurrencies like legacy Bitcoin (BTC) would its bubble.

The FSS director held a meeting with the Korean Blockchain Association (KBA) before making his latest remarks. Also in attendance were representatives from local cryptocurrency exchanges and the chairman of the KBA’s self-regulatory committee.

Besides promoting acceptance of cryptocurrencies, Choi added that he would like to see banks work closely with crypto exchanges. Most of the exchanges have had difficulty opening virtual accounts, and are pushing for a better working relationship between the exchanges and the banks. Banks have only issued virtual accounts to the top four exchanges in the country: Upbit, Coinone, Bithumb, and Korbit. Banks haven’t been eager to issue virtual accounts to small and medium-sized exchanges.

By the end of January, 25 exchanges had joined the organization for the sole purpose of being able to obtain a virtual account. In light of the reluctance of banks to allow virtual accounts, 12 exchanges sent a letter to the KBA on Monday, requesting a meeting to determine how to best deal with the situation. Without the virtual accounts, exchanges cannot allow fiat deposits and have had to rely on their corporate accounts to conduct transactions. This is a problem, since regulators having been clamping down on corporate financial activities to control money laundering.

In recognizing the problem the smaller exchanges have been facing, Choi commented, “I will encourage KB Kookmin Bank and KEB Hana Bank to deal with virtual currency handling businesses. The government will encourage banks to make transactions with cryptocurrency exchanges.” It just goes to show that even politicians can correct their mistakes.

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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