South Korea has always been a major hub for cryptocurrencies and related innovations. The crypto craze in the nation has even engulfed banks and another major bank is looking to offer banking services for crypto exchanges.
According to a report from local news outlet Busan.com, the BNK Busan Bank has launched a program where it plans on visiting competitors’ banks that offer services to crypto businesses and study how these institutions are dealt with amidst the forthcoming regulation.
Since the Banks provide fiat services to crypto businesses, the upcoming legislation will require the banks to use the Information Security Management System (ISMS) certification. This is the reason behind BNK Busan Bank’s Digital Strategy Department and the Money Laundering Prevention Department conducting the research before offering the service in the future.
Starting Friday, domestic crypto exchanges would be required to collect the real names and social security numbers of their clients via the ISMS system provided by the South Korean banks. Popular crypto trading platforms like Bithumb are already in arrangements with the NH Nonghyup Bank for implementing such a system.
Several other domestic businesses like Coinone, Upbit, and Kobit have also closed deals with South Korean banks to comply with the upcoming legislation.
As such, the report continued that the BNK Busan Bank is considering offering its crypto services if all goes according to plan. The bank will target small and medium-sized exchanges such as Copax and Gdac.
Complications
However, the implementation of the ISMS system has been a topic of broad discussion because of the difficulties in implementing it. According to Heo Baek-young, CEO of Bithumb, smaller companies could “struggle” to meet the ISMS certification requirements. Young believes only four to seven exchanges would survive the new regulation.
There have been complaints regarding the higher costs of leveraging the ISMS certification system for small and medium-sized crypto trading platforms.
The South Korean Financial Services Commission had announced earlier this month that amendments will be made to the Reporting and Using Specified Financial Transaction Information Act and it will come into effect on March 25.
Per the regulations, Businesses that deal with the exchange, custody and management of cryptocurrencies will have to report to the Korea Financial Intelligence Unit (FIU), which oversees the implementation of AML practices in the country.
