South Korean banks still refuse to help most crypto exchanges

South Korean banks still won't service the nation's smaller crypto exchanges ahead of new government rules coming into effect.

South Korean banks still won’t help anyone that isn’t Bithumb, Korbit, Upbit, or Coinone to fulfil strict new government banking requirements, local media D.Street reported last week.

The nation’s Financial Services Commission (FSC) held a private meeting on June 3 with 20 local crypto exchanges, the outlet noted citing sources familiar with the matter.

16 small and medium-sized crypto exchanges told the finance watchdog they continue to face rejection from South Korean banks.

One exchange insider said (quote automatically translated from D.Street):

“The four major exchanges which secured real-name accounts mostly listened to stories quietly, but I know that small and medium-sized exchanges have expressed their difficulties.”

South Korean banks not sold by crypto commissions

In late March, the FSC gave local exchanges six months to ensure users have “real name” bank accounts tied to their crypto activity.

Banks providing those accounts will be responsible for detecting suspicious crypto activity, and face fines if their failure comes to light.

However, the institutions are apparently only prepared to carry the responsibility of monitoring the nation’s largest exchanges.

This is despite South Korean banks raking in healthy commissions on money flowing into crypto markets. Overall, local crypto traders sent at least $58 billion to exchanges last quarter.

Maintaining such intensive banking relationships is also reportedly not cost-effective for smaller platforms.

But even prominent exchange OKEx left South Korea altogether shortly after the FSA announced the new rules.

Upbit currently processes more crypto volume than the rest of the top 8 exchanges combined.

[Read more: 100 South Korean crypto exchanges could close in six months, report]

The FSC was said to have expressed sympathy for those exchanges. Still, regulators wouldn’t pressure or interfere with South Korean banks’ decisions.

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