Fearing that the rise of cryptocurrencies could lead to a surge in crime, South Korea is reportedly probing six local banks over clients’ virtual currency accounts.
South Korean financial authorities on Monday said they are inspecting six local banks that offer virtual currency accounts to institutions, amid concerns the increasing use of such assets could lead to a surge in crime.
The joint inspection by the Financial Services Commission (FSC) and Financial Supervisory Service (FSS) will check if banks are adhering to anti-money laundering rules and using real names for accounts, FSC Chairman Choi Jong-ku told a press conference.
The six banks are reportedly NH Bank, the Industrial Bank of Korea, Shinhan Bank, Kookmin Bank, Woori Bank, and the Korea Development Bank.
South Korea announced last month that it would apply additional restrictions to cryptocurrency trading. Among the restrictions are a ban on anonymous trading accounts and the temporary suspension of institutional crypto investments.
“Virtual currency is currently unable to function as a means of payment and it is being used for illegal purposes like money laundering, scams and fraudulent investor operations,” said Choi.
“No one knows what is going on at these places that handle cryptocurrency because there is no direct regulation system in place regarding these institutions,” Choi said.
Despite all the restrictions however, demand for cryptocurrencies remain incredibly high in South Korea, with Bitcoin Cash currently trading at a massive premium there over the global average.