A South Korean bankers federation Wednesday denied asking banks to close accounts with cryptocurrency exchanges.
The Federation of Korean Banks issued the statement immediately after the Ninebit cryptocurrency exchange announced the suspension of cash deposit and withdrawal services through its account.
Ninebit’s freezing of cash deposit and withdrawal sent a shock wave through investors. The closure of the account also alarmed other exchanges.
Investors and exchange operators speculated that the government, through the Korea Federation of Banks, asked the banks to close accounts with all exchanges.
However, Ninebit’s announcement turned out to come out of miscommunication. The Industrial Bank of Korea (IBK), has reportedly informed Ninebit that it might not maintain accounts unless Ninebit abided by the anti-money laundering guidelines. The IBK’s message was a warning to Ninebit to abide by the anti-money laundering rule.
However, an IBK official said Ninebit misconstrued the warning as the bank’s decision to close its account. He said, “IBK has never said that it would shut down the accounts.” He added that Ninebit arbitrarily announced the shutdown.
In South Korea, investors can invest in cryptocurrencies only through an exchange’s designated corporate account. The designated account is called the ‘honeycomb account’ because all investors’ money must move in and out of the centralized account.
Financial regulators have been closely monitoring the exchange accounts. Close monitoring is to prevent the use of cryptocurrency investment in money laundering and crime financing and capital flight.
The Organization for Economic Cooperation and Development (OECD) reported that Korea and China are the only two OECD countries which ban the initial coin offering (ICO).