Korea’s current ban on cryptocurrency exchanges from opening accounts with banks is arbitrary and illegal, according to the Korea Blockchain Association.
It claimed that the Financial Supervisory Service and the Korea Financial Intelligence Service had abused their authority because they arbitrarily and informally asked banks and cryptocurrency exchanges to map out ways of preventing money laundering to open accounts. Before asking the banks and cryptocurrency exchanges to set up anti-money laundering measures, the government should outline its clear-cut written guideline, it said.
Currently, South Korean banks are reluctant to open accounts with cryptocurrency exchanges, apparently not to embarrass financial regulators and out of fear that the exchanges may use the accounts for diverting money out of Korea, laundering money and other crimes.
The association said the government could monitor the suspicious movement of funds even though it permits exchanges to open virtual accounts. The government could order banks to freeze the virtual accounts when it detects suspicious movement of funds, the association claimed.
The association said the Korea Financial Intelligence Service could prevent the laundering of money by allowing the cryptocurrency exchanges to open virtual accounts, not by preventing them to open the accounts. It said the government agency had no legal basis in preventing the exchanges from opening the accounts and in asking them to set up anti-money laundering measures.
The association also said the government violated the Fair Trading Act by banning the exchanges from opening accounts. It said South Korea is a democratic country guaranteeing freedom of doing business. However, the government controls the cryptocurrency exchanges without any regulations, it contended.
The Financial Supervisory Services should issue a legal guideline before arbitrarily preventing the exchanges from opening accounts before they set out anti-money laundering measures, the association said.
The association made these claims in a seminar lawmaker Min Byung-doo of the governing Democratic Party hosted Wednesday at the National Assembly.
