South Korean commercial banks are likely to see local cryptocurrency exchanges with ‘too many’ coins in offerings as high risk, which might deplete their chances to receive real-name account services, The Korea Herald reported on Monday.
According to a document released in the public domain by an opposition party lawmaker, the risk assessment guidelines drafted by the Korea Federation of Banks, a body of commercial and real-estate lenders, in April showcase the South Korean banks’ stance towards cryptocurrency exchanges. The banking body has 22 full members and 36 associate members.
South Korea mandated the requirement of maintaining real-name banking accounts for new cryptocurrency exchanges, while the existing ones have to comply with the new framework by the end of this year.
Currently, only four top South Korean exchanges, Upbit, Bithumb, Coinone and Korbit, have managed to operate with appropriate banking support, while smaller exchanges are still struggling to get a banking partner. Many local exchanges have shuttered as banks are not willing to work with them.
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Apart from the number of offered crypto pairs, ‘low credibility’ tokens and ‘other financial services besides regular transactions’ by crypto exchanges might get them the status of being high risk. In addition, the banks will assess the clients’ nationality and their occupation.
However, the guidelines specified that each bank can come up with its own risk assessment measures too.
Exchanges Are Already Trimming Services
Many local crypto exchanges are taking steps to comply more and more with the banking requirements. At least eleven exchanges, including Upbit, Huobi Korea and Coinbit have recently dropped several low-volume digital currencies and put dozens into a warning list.
Meanwhile, the Financial Services Commission (FSC), which is responsible for overseeing the local crypto industry, have directed the banks to put digital currency exchanges on the list of high-risk clients and ordered them to mandate user ID verification.