South Korean crypto exchanges were dealt another blow in their aim to gain banking contracts that are keys in determining if they can keep doing business with government and comply with regulations to police trading platforms set to take effect on September 25.

After the promulgation of the country’s first crypto-specific legislation last March, exchanges were given a grace period of six months to secure real named-authenticated banking contracts with local financial institutions.

They must also obtain information security management (ISMS) certification and comply with other essential requirements such as introducing anti-money laundering protocols if they are to continue their operations.

Failing to comply with all requirements

Currently, the number of crypto exchange platforms that have put AML systems into place and gained their respective ISMS certificates continue to grow.

But the problem comes with regards to banking as even the “big four” exchanges namely Upbit, Bithumb, Korbit and Coinone have yet to ensure that their deals with neobank K-Bank and commercial banks NongHyup and Shinhan will be renewed.

While these bigger exchanges have the luxury to assume they can renew with their existing partners after a successful few months or find new partners, a larger pack of similar industry players are determined to win the chase in beating the deadline to make their businesses survive.

Window of opportunity closing

It appears though, that the situation is becoming bleaker for these exchanges as banks have been given the burden to conduct their own risk assessment checks on trading platforms.

Furthermore, they are made aware that they will shoulder the blame should any of these crypto exchanges suffer a security breach or be involved in fraud.

Three financial institutions in Kookmin, Woori and KEB Hana have already ruled out the idea of partnering with exchanges, but the biggest blow came from BNK Busan which previously expressed interest in working with the industry players.

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Source: https://bitcoinerx.com/blockchain/south-korean-banks-closing-doors-on-crypto-exchanges/