Cryptocurrency exchanges plan to sue South Korean government over restrictions

With the introduction of new rules by the Financial Services Commission of South Korea (FSC), many small cryptocurrency exchanges in the country fear the need to shut down.

The introduced rules require each platform to prove that it has an open account with one of the Korean banks, while these financial institutions do not cooperate with cryptocurrency companies. A dilemma arises, due to which the management of the exchanges is preparing for lawsuits.

By tradition, let’s start with an explanation. The South Korean government’s relationship with cryptocurrencies is uneasy, albeit not entirely tense. For example, in January 2018, the country’s leadership banned anonymous trading in coins, which created certain problems for privacy lovers.

As a result, it became clear that officials are primarily concerned about the transparency of trading, and they have no desire to ban coins completely. At the same time, in March of the same year, the South Korean Ministry of Labor banned government employees not only from owning coins, but also from trading them.

And although cryptocurrency exchanges still operate on the territory of the state, small companies have problems with this. Moreover, the latter are formed precisely because of the activity of regulators, with which trading companies are not going to put up.

What’s happening with cryptocurrencies in Korea?

In accordance with the new FSC rules, local banks are obliged to refuse to provide services to any client of the crypto exchange, which, in their opinion, does not confirm their identity or is noticed in suspicious activity. In other words, the government and regulators have essentially shifted much of the responsibility for dealing with cryptocurrency companies to the banks themselves.

And since the Federation of Korean Banks and several commercial lenders have already petitioned FSC to change the new rules, fearing its potential liability for financial crimes on crypto exchanges, the government may soon face pressure from all sides. The management of several exchanges is considering filing a constitutional appeal against the government and financial regulators for their alleged waiver of liability in regulating the industry.

Banks in the country openly interact only with the largest Korean platforms such as UPbit, Bithumb, Coinone and Korbit. But less well-known sites are deprived of the attention of financial organizations and find themselves in a difficult situation in which mutually beneficial cooperation is almost impossible.

Here is how the situation was commented on by an anonymous person involved in the situation. His line is quoted by Cointelegraph .

Banks these days refuse to initiate cryptocurrency exchange verification processes without clear reasons, and most exchanges are unable to confirm their legitimate intentions. The Financial Services Commission must intervene immediately.

This means that representatives of the cryptocurrency world in this case agree that the inconvenience is caused precisely by the regulatory authorities, which did not foresee such a scenario. Accordingly, questions should be asked first of all to them.

Korea police

Korea police

We believe that such problems will soon become a thing of the past. Obviously, as Bitcoin and other cryptocurrencies turn into legal tender in different countries, banks will have no choice but to fully interact with digital assets. Accordingly, cryptocurrency exchanges also do not have to prove the legitimacy of their existence through various certificates, accounts and other trifles. Therefore, time in the niche of blockchain and decentralization will clearly put everything in its place.

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