South Korean crypto exchanges may sue the government for passing the regulatory buck upon banks. Most of the crypto exchanges in South Korea fear closure owing to the new anti-money laundering regulations that require them to submit a document to prove they have a real banking account with the native banks by September 24. However, the banks are refusing to offer their services in fear of facing penalties from the chief regulatory body.
Only a handful of banks namely K Bank, NH Bank, and Shinhan Bank are conducting a risk assessment for a few top crypto exchanges such as UPbit, Bithumb, Coinone, and Korbit. However the same is not true for smaller exchanges.
Several small crypto exchanges are planning to lodge a constitutional appeal against the government for avoiding their responsibilities. They believe the government should have taken up the initiative on their own rather than passing the buck onto banks. One of the exchange operators explained,
“These days, banks are refusing to initiate their cryptocurrency exchange verification processes without clear reasons and most exchanges are failing to get a chance to prove themselves. The Financial Services Commission needs to step in right away.”
Would the Korean Government Ammend Rules Amid Growing Pressure?
Earlier, the Korean Federation of Banks Nd other financial lenders have also appealed to the government to take back the new regulations in fear of facing consequences under the new anti-money laundering law.
The South Korean government had recently increased the deadline to September for the submission of documents under the new law as the majority of crypto exchanges failed to submit the required documents on time. The government has recently gone on a regulatory clampdown spree because of which several exchanges in the country had already started delisting several altcoins from their platform.