South Korean banks cancel account cryptocurrency companies under the influence of the government

South Korean regulators announced a plan forbidding banks to undertake activities related to digital currency. Under the impact of the ban is applied to all of the leading cryptocurrency exchanges in the country, including Bithumb, Coinone and Korbit. In the number of banks has already made a statement on the termination of opening accounts for cryptoanalytic companies included Shinhan Bank, Korea Development Bank and Industrial Bank of Korea.

In fact, South Korea follows the path of China, where a similar ban was introduced in late 2013, bringing down the exchange rate of bitcoin, which was the first time rose above $1 000. However, South Korea is unlikely to come to repeat this achievement, as the country is not as influential in the cryptocurrency space, as China in the fall of 2013.

Who South Korea to ban trade in cryptocurrency

The South Korean government is constantly discussing the regulation of cryptocurrencies. On Wednesday, the local newspaper reported that regulators are planning to prohibit banks from conducting activities associated with cryptocurrencies:

«According to the Prime Minister’s office, Seoul, prohibit financial institutions to operate with bitcoin, including its purchase, processing or storage as collateral».

It is also reported that «Korean banks that provide a virtual Bank account for the cryptocurrency trading, it will be necessary to verify owners of accounts when creating new accounts.»

Virtual Bank accounts are opened by banks for traditional customers of cryptocurrency exchanges. A client who is going to start trading on the crypto currency exchange, you must first open a virtual Bank account and put money on it. All the major Korean stock exchange, including the largest cryptocurrency exchange Bithumb, require their clients to start trading to open a virtual Bank account. One of the major news publications in the country, Kyunghyang Shinmun, wrote:

«Trade virtual currency may only be done on the exchange virtual currency and transfer money into a virtual account assigned to the exchange».

Yesterday’s announcement was the first action of regulators to limit virtual Bank accounts. Major state and commercial banks of the country immediately responded to the government’s statement announcing the termination of the create virtual Bank accounts for crypto-currency exchanges. Some banks immediately started to take action by cancelling the existing account:

«These measures will supersede the majority of traders with the cryptocurrency market as the major exchanges of the virtual currency countries, such as Bithumb and Coinone require from users before committing to a transaction to create a virtual account», — reports the edition of Arirang News.

If the Bank is closed tied to the exchange virtual accounts «to buy and sell cryptocurrency through the Bank will be absolutely impossible,» — said Business Korea.

The big banks are fleeing the ship

In the number of banks that made the decision to stop the opening of virtual accounts, included Shinhan Bank, Korea Development Bank (KDB), Industrial Bank Of Korea (IBK), Woori Bank, KB Kookmin Bank Hana Bank and KEB.

Shinhan Bank, creating accounts for exchanges Bithumb and Korbit, will open new virtual accounts, but will not close existing ones. We will remind, in November the Bank launched a cryptocurrency custodial service.

State Bank KDB, which creates a virtual Bank account for Coinone, announced that he «cease all activity related to cryptocurrency transactions including bitcoin, from January next year.»

Woori Bank, which opens a virtual account for exchange Korbit, follows the same approach as KDB. The Bank shall cancel the existing virtual account and will stop to open new ones. Banks IBK Bank, KB Kookmin Bank and KEB Hana Bank also stopped the creation of virtual accounts.

At the time of writing, the Bank Nonghyup Bank has not made any statements on this issue. According to one of the publications, the Bank provides services to open virtual accounts for multiple cryptocurrency exchanges, including Bithumb, Coinone and Korbit.

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