Upbit and Korbit Likely to Renew Real-Name Cryptocurrency Accounts with Shinhan Bank and K-Bank (Comprehensive)

Enforcement of the Special Financial Transactions Act until September 24... Contract Maturity Likely to Be Delayed
Official Renewal Expected After Reporting Under the Special Financial Transactions Act
Eun Seong-su: "Banks Bear Primary Responsibility for Money Laundering"

[Asia Economy Reporter Kim Jin-ho] Shinhan Bank and K Bank are seriously considering extending their real-name account contracts with cryptocurrency exchanges such as Upbit and Korbit. Similar to NH Nonghyup Bank, it is widely expected that the contract expiration will be postponed until September 24, when the Act on Reporting and Using Specified Financial Transaction Information (the Specified Financial Transaction Information Act, or Specified Act) comes into effect. The official decision on contract renewal is anticipated to depend on whether the Specified Act registration is approved.

According to financial industry sources on the 1st, Shinhan Bank and K Bank have decided to continue providing real-name account services to Korbit and Upbit, respectively, until the Specified Act registration deadline. An insider familiar with internal affairs stated, "Both banks have agreed to provide existing services until the Specified Act registration deadline. If the registration is not approved, the contracts will naturally be terminated, so there will be no significant changes for now."

Real-name account partnerships are essential elements for Specified Act registration, along with Information Security Management System (ISMS) certification. Previously, on the 24th of last month, Nonghyup Bank agreed to extend contract expiration with Bithumb and Coinone until September 24. Although the original contract was set to expire at the end of this month, the extension was made to allow time for bank evaluations in line with the grace period for cryptocurrency operators’ registration under the Specified Act.

The short-term extension decisions by these banks were made based on the continuation of existing contracts and management considerations. After the Specified Act registration is approved, official contract renewals will involve more rigorous inspections based on strengthened criteria, including high-risk item checks for individual cryptocurrency exchanges, account segregation, and security systems.

A bank official involved in real-name account partnerships commented, "Until the Specified Act registration is completed, the current contractual relationships will inevitably continue. We are currently conducting thorough reviews to facilitate smooth registration under the Specified Act."

From the banks’ perspective, the cryptocurrency boom since the end of last year has generated substantial fee income, which positively influences their evaluation of partnerships with exchanges. The total cryptocurrency deposit and withdrawal amount for Shinhan Bank, Nonghyup Bank, and K Bank in the first quarter of this year (January to March) reached 64.2 trillion KRW. Consequently, the fee income for these three banks in the first quarter amounted to 6.8 billion KRW. In particular, K Bank experienced explosive growth through its partnership with Upbit. As of the end of March, K Bank had 3.91 million customers, an increase of 1.72 million from the end of last year. This growth surpasses the 1.57 million customers acquired over the past three years (2018?2020), thanks to the cryptocurrency craze.

Most Small and Medium Exchanges Likely to Struggle with Real-Name Account Issuance

Unlike the four major exchanges, most other exchanges reportedly have not even found banks willing to consult or evaluate their real-name account issuance. These three banks have no plans to consider new partnerships beyond the existing contracts with the four major exchanges. Other commercial banks, including KB Kookmin Bank, Hana Bank, Woori Bank, as well as regional banks like Busan Bank, remain skeptical about issuing real-name accounts due to anti-money laundering concerns.

In response, the Korea Federation of Banks has submitted a request to financial authorities, asking that banks be exempt from liability if money laundering incidents occur, provided there is no gross negligence or intentional misconduct during the banks’ real-name verification and deposit/withdrawal account screening. Although the financial authorities are expected to announce their stance within this month, the likelihood of granting such immunity is low, as there is no precedent for providing immunity related to money laundering.

The Basel Committee on Banking Supervision, which sets global financial supervisory standards and discusses issues among regulators, is also skeptical. The Basel Committee recently pointed out that cryptocurrencies are being exploited for money laundering and terrorist financing, posing risks to banks’ anti-money laundering efforts.

Meanwhile, Financial Services Commission Chairman Eun Sung-soo rejected criticisms that banks bear a heavy burden in issuing real-name accounts for cryptocurrency exchanges. Speaking at a plenary session of the National Assembly’s Political Affairs Committee, Chairman Eun said, "The primary responsibility for money laundering lies with the banks. It is not that authorities are interfering, but because U.S. authorities impose enormous penalties that could collapse banks, banks are naturally cautious."

He added, "So, if you want to get a real-name account, you should go to a bank that is prepared. If the bank believes it can handle it, it will accept the account. If it thinks it might collapse due to mistakes, it won’t. If a bank cannot make such judgments, it should not be in the banking business."

This content was produced with the assistance of AI translation services.