This Week's Turning Point for Real-Name Account Contracts at Cryptocurrency Exchanges

NH Nonghyup and Shinhan Bank to Decide on Contract Renewal with Bithumb, Coinone, and Korbit

[Asia Economy Reporter Park Sun-mi] The decision on whether three cryptocurrency exchanges?Bithumb, Coinone, and Korbit?will secure real-name bank deposit and withdrawal accounts is expected to be made as early as this week. Including Upbit, which has already completed the contract renewal for real-name accounts with K Bank, it is anticipated that only about four major cryptocurrency exchanges will meet both reporting requirements and be able to operate as normal cryptocurrency exchanges.

According to the financial sector on the 6th, NH Nonghyup Bank plans to decide by the 8th whether to renew the real-name deposit and withdrawal account contracts with cryptocurrency exchanges Bithumb and Coinone. Apart from these two whose contracts are about to expire, no new exchanges are currently under contract review. Shinhan Bank is also expected to decide on renewing the real-name account contract with Korbit as early as this week. The due diligence was completed last month, and the final review is now in its last stages.

This week marks a turning point to gauge which exchanges fulfill both requirements necessary for cryptocurrency exchange operator reporting: obtaining Information Security Management System (ISMS) certification and securing real-name bank accounts. The deadline for cryptocurrency business operator reporting under the Act on Reporting and Using Specified Financial Transaction Information is the 24th of this month. Due to the Chuseok holiday, the effective reporting period is only about two weeks. Considering the preparation needed for reporting, it is stable to meet all requirements within this week.

Industry insiders believe that the banking sector is reluctant to add new real-name account contracts with cryptocurrency exchanges due to the significant liability risks if problems arise, so only about four exchanges will be able to continue cryptocurrency exchange operations as before. The 17 exchanges that have obtained ISMS certification but have not secured real-name accounts are expected to register as operators conducting only coin-to-coin trading without Korean won transactions and will attempt to secure real-name accounts in the future.

On the other hand, exchanges that have not even obtained ISMS certification are inevitably facing closure. According to the Financial Services Commission, as of the end of July, among 42 exchanges without ISMS certification, only 18 have ongoing applications. Twenty-four exchanges have not even applied for ISMS certification, and since it typically takes 3 to 6 months after application to obtain ISMS certification, it is highly unlikely they will secure certification before September 24.

According to the Financial Supervisory Service guidelines, when cryptocurrency exchanges face situations such as partial business closure decisions, non-reporting decisions, or receipt of notification of report rejection, requiring them to cease some or all operations, they must notify members of the related information at least 7 days in advance.

Considering the reporting deadline of the 24th, exchanges must notify customers about closure and suspension of trading by the 17th. The notice must be issued immediately once the business closure is confirmed. After the closure notice, new deposits of funds and cryptocurrencies will be suspended. New member registrations will also be halted. However, to minimize consumer damage due to the wave of cryptocurrency exchange closures, exchanges must support withdrawals of deposits and coins through dedicated channels for at least 30 days after the business closure date. Users can also transfer their existing coins to other exchanges.

A financial authority official advised, "If cryptocurrency exchanges do not report to the Financial Intelligence Unit by the 24th, they will have no choice but to close or suspend operations. Users dealing with virtual asset operators who have not applied for ISMS certification are at risk of damage due to closures or suspensions, so it is necessary to take proactive measures such as withdrawing deposits and coins in advance."

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