Joining a long list of exchanges in South Korea, Bithumb too has suspended the opening of new virtual accounts after having failed to renew its contract with the bank. The suspension started as of the 1st of August and currently only three exchanges in the country are able to open new accounts.

One Month Grace Period

The cryptocurrency exchange made the announcement of halting the opening and issuing of new virtual accounts on the 1st of August. The reason cited by the company is that their contract with NH Nonghyup Bank could not be renewed.

Bithumb is one of South Korea’s largest exchanges with a daily trading volume of  $212,078,076 USD at the time of writing and according to coinmarketcap’s ranking, the exchange is the largest exchange in terms of trading volume.

The local news in the country has said that the bank has allowed the exchange with a one month’s grace period in which the users that already have virtual accounts can withdraw and deposit the native currency; Won. However, it is being noted and experienced with other exchanges that are undergoing the same thing that if the bank does permanently suspend their application, it is going to get harder to use their virtual accounts.

And in South Korea, virtual accounts are required to make crypto-Won trades, withdraw and deposit into and from an exchange.

Real-Name System

At the end of January this year, the South Korean government unveiled its step to side-step cryptocurrency enabled money laundering by releasing a virtual account system called real name.

The aim of real-name systems is to increase transparency in the field and make sure that the people involved in the cryptocurrency market in their country are not laundering money. To ensure that this system is used by all exchanges, the government has made it mandatory for all exchanges, with reasonably clean trading records,  to move their virtual account provisions to the new system.

Currently, there are four cryptocurrency exchanges that are using the real-name system that is further provided by banks. The four exchanges that can open and continue to provide virtual account services are; Upbit, Bithumb, Coinone, and Korbit as a part of the South Korean government’s Anti-Money-Laundering Drive. Other exchanges in the country are still using corporate bank accounts.

Bank Remains Firm on Rejection

When approached with an appeal to change its mind the bank firmly rejected to reconsider. The first batch of renewal after the launch of real-name services was due in July. While the other three exchanges got their approvals without much of a hassel, the approval of Bithumb seems to have hit a major roadblock.

A lot of local news reporters and written media have been seen quoting the bank saying that the government and the bank themselves have a few issues concerning the exchange’s approach to protecting its users and their information.

It seems that Bithumb officials are running helter-skelter to get this approval done and one even made a statement that they are in the process of ironing-out final details with the bank which will hopefully convince them to renew Bithumb’s contract.  

Also, read: Top 5 passive money making ways in the crypto market

Ramaa Mohan