Korean Banks Restrict Services To Crypto Investors Who Act Against “Real-Name System”
A recent post revealed that South Korean banks are setting barriers when it comes to offering services. In particular, those who do not abide by Korea’s cryptocurrency-based “Real-Name System”, will see reduced benefits. The system was first established back in January 2018 and required crypto investors to get their respective accounts verified in order to trade.
As per Money Today’s report, ever since the name system’s launch, only a little under 50 percent of accounts have since been verified into one that houses a real name. News Bitcoin quoted the news outlet saying the following:
“The conversion rate to the real-name verified accounts for each [crypto] exchange site is only 40 to 50%”
Procedures To Get An Account Verified
The procedures to get an account verified is not as simple as providing a government-issued ID. With the Real-Name System, investors are required to go to a financial institution where an account must be created and must match an existing agreement with the said crypto exchange.
To better understand the system in place, an example has been provided. Let’s say a crypto investor does his or her trading via Bithumb, then in order to get an account verified, the crypto exchange must have an agreement with a Korean bank. As for Bithumb, it has arranged with Nonghyup Bank.
Getting back to the relatively low conversion rate, Money Today revealed that many investors do not see the need to convert because they “invest only with the funds they have already deposited.”
Problems To Arise Given Accounts Are Not Name-Verified!
While some investors are fine with trading with what has already been deposited prior to the Real-Name System, financial institutions are simply not having it. Therefore, banks have decided to limit their services, as they view any moves against their policies as unacceptable. News.Bitcoin.com referenced a Korean, unnamed bank official, who was quoted saying the following:
“Banks will take measures to limit services unless they [crypto investors] switch to real-name verified accounts by a certain date. […] If new real-name verified accounts are not issued, some restrictions on the Korean won deposit/withdrawal will be considered.”
With such strict rules in place, crypto exchanges have also taken the necessary measures to induce investors to get their accounts verified. For instance, Bithumb has supposedly cut down its daily Korean won withdrawal rate for unverified accounts by 10 percent. Upbit is another exchange that took a totally different approach. As opposed to the negative reinforcer approach taken by Bithumb, the latter conducted a giveaway to those who have converted their accounts.
How do you perceive this crypto-bank mash up taking place in South Korea? Does it make sense to combine a centralized and decentralized system?