FATF: South Korean Crypto Exchanges Face Stricter Regulations

The Financial Action Task Force (FATF) in South Korea has issued new recommendations on virtual currency regulations. These changes are bound to affect the four large domestic sites as they attempt to re-open their accounts with commercial banks.

According to the FATF guidance released in June, Bithumb, Upbit, Coinone, and Korbit will have to adhere to stricter norms while renewing their existing contracts with commercial banks for issuing and operating trading accounts.

New FATF guidelines

Usually, contracts between the banks and the trading accounts are made every six months. The sites provide the banks with some profit through the use of the deposit asset. Previously, commercial banks renewed the contracts after six months without any objection. However, this trend changed from June following the new regulations. 

FATF requires that the crypto service providers comply with the Anti-Money Laundering rules. This move is in a bid to combat money laundering charges that are on the rise in the crypto scene. 

For the renewed contracts, Bithumb and Coinone will have their company assets separate from the customer assets. They will also need to provide member information protection and a working detection system for any financial accidents. The two crypto trading sites are in agreement with these new guidelines.

The same does not apply to Korbit, whose negotiations with Shinhan Bank have hit a snag. An official from the site said, “There are few accounts involved in financial fraud in the co-op account, so it is said that the payment suspension has been made recently and it will be difficult to renew the account.” These comments were regarding the enhanced voice phishing requirements. 

Small and Medium Trading Sites Likely to Disappear

It is likely that small and medium crypto trading sites will disappear from the scene because they lack the necessary funds for them to meet the new requirements.

The new FATF guidelines make commercial banks liable in case of money laundering charges. Although the guidance is not legally binding, countries that opt-out may not feature in the global financial network.