Increasingly South Korean Crypto To Crypto Exchanges Are Hoping To Make A Profit In Fiat Currency

• Although a group of South Korean crypto exchanges may be granted permission to begin crypto-to-fiat trading, perspectives disagree on whether the 23 exchanges presently stuck in crypto-to-crypto limbo will be allowed to do so.

• The major four cryptocurrency exchanges have agreements with larger commercial banks, so they can continue to sell KRW pairs.

• most banks positions haven’t changed much, and they’re still concerned that money laundering concerns which must be borne by the bank in the case of a crypto exchange-bank collaboration are a prohibitive weight.

After a breakthrough banking deal last week, a group of South Korean crypto exchanges could be granted permission to resume crypto-to-fiat trading but opinions differ on whether the 23 exchanges currently trapped in crypto-to-crypto purgatory will be able to escape before being overwhelmed by financial pressures.

The Major Four Cryptocurrency Exchanges Have Agreements With Larger Commercial Banks

As previously reported, Gopax became the country’s first non-big four crypto exchange (after Upbit, Bithumb, Coinone, and Korbit) to reach an agreement with a commercial bank last week, allowing it to begin crypto-to-crypto trading (subject to regulatory approval). Gopax signed an agreement with Jeonbuk Bank, a regional bank that is relatively new. The major four cryptocurrency exchanges have agreements with larger commercial banks, so they can continue to sell KRW pairs. Banks must provide exchange customers with actual name-verified, linked bank accounts that are monitored for any money-laundering violations in these circumstances.

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Following regulatory measures that went into effect in September last year, a substantial number of small and medium-sized exchanges were compelled to either close their doors or receive Information Security Management System (ISMS) accreditation from a government agency and remove fiat trading alternatives. Most banks have refused to cooperate with these exchanges, putting them in a precarious position. Last week’s news, on the other hand, appears to have given rise to new optimism. 

Many analysts believe GDAC, Hanbitco, and Huobi Korea (three of the top crypto-to-crypto exchanges) have a high potential of resuming KRW market activity, according to Seoul Finance. It is known that these exchanges are planning to issue genuine name-verified accounts and are in the midst of negotiating with banks, according to the report.

Last week, a top executive at one of Gopax’s competitors said there is now quiet optimism for trading platforms that are continuing to speak with local banks. Larger commercial banks, according to Mira Kim, a South Korean blockchain consultant, are unlikely to agree to transactions with exchanges because they remain too risk-averse. However, she said that a lot of smaller banks of a comparable magnitude to Jeonbuk Bank were open to finding ways to collaborate with exchanges. The success of Upbit and its banking partner, K-Bank, a newer bank, last year turned the heads of neobanks and regional banks, according to Kim.

As Kim put it, The [smaller] banks see crypto exchanges as an opportunity to expand their customer base among the younger generation. They’re interested, but there are still hazards. According to Seoul Finance, an unnamed commercial banking employee agreed with the latter statement. According to a source close to the situation, Due to their significant degree of interest in the cryptoasset market, banks are continuing to promote [crypto-]related firms. Issuing real-name-verified accounts, on the other hand, is a another storey. The general consensus is that there are more issues to be resolved here. And nothing has changed.

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Gopax Could Emerge As A Black Horse Capable Of Breaking The Crypto Monopoly Of The Big Four

According to the same research, most banks positions haven’t changed much, and they’re still concerned that money laundering concerns which must be borne by the bank in the case of a crypto exchange-bank collaboration are a prohibitive weight. Meanwhile, Newsway said that Gopax could emerge as a black horse capable of breaking the crypto monopoly of the big four. The exchange is now expected to get regulatory approval and begin offering KRW trading in the first half of 2022, according to the same report. Because Jeonbuk has a small number of branches, Gopax predicted that most bank account opening activities will have to be done online.