Regulators Inspect Virtual Bank Accounts for Corporate Customers over Cryptocurrency Worries | Be Korea-savvy

Regulators Inspect Virtual Bank Accounts for Corporate Customers over Cryptocurrency Worries

(image: Bithumb)

(image: Bithumb)

SEOUL, Jan. 10 (Korea Bizwire)South Korea’s financial regulators have inspected banks that have opened virtual accounts for corporate customers amid concerns that such accounts could be exploited as a loophole to attract new investors for cryptocurrencies, an official said Wednesday.

Regulators have banned banks from offering virtual accounts, which are needed to sell or buy cryptocurrrencies, to individual customers, in the latest measure to help prevent speculative investment for virtual coins.

However, virtual bank accounts for corporate customers allow them to create hundreds of thousands of bank accounts for individuals.

The problem is that cryptocurrency exchanges have used such accounts to lure new investors for virtual coins at a time when virtual bank accounts for individual customers are banned.

“Such accounts have a high possibility of an accident,” the official at the financial authorities said.

Financial regulators are conducting on-site inspections into six retail banks over accounts used in trading cryptocurrencies.

Regulators are closely watching whether banks comply with anti-money laundering rules in connection with cryptocurrency-related accounts, officials said.

Cyrptocurrencies, such as bitcoin and ethereum, have rapidly gained popularity in recent years among South Korean investors hoping to make quick money.

South Korea is home to one of the world’s biggest private bitcoin exchanges, with more than 2 million people estimated to own some of the best-known digital currency.

Despite a boom in cryptocurrency transactions, their exchanges go largely unregulated in South Korea, as they are not recognized as financial products. There are also no rules for protecting virtual currency investors.


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