Due to Money-laundering and Hacking Risks
Most South Korean banks are not planning to form any partnership with cryptocurrency exchanges. In addition, Shinhan Bank and NH Bank, which provided real-name accounts for cryptocurrency exchanges, are making no comment on whether to extend their contracts with the exchanges.
Those exchanges’ risks include high possibilities of money laundering and hacking incidents. A lot of cryptocurrency exchanges have been hacked or shut down due to the risks since the appearance of Bitcoin in 2009. Any bankruptcy or hacking on an exchange’s part may lead to criticisms targeting a bank.
Cryptocurrency exchanges are not free from the risk of money laundering in that cryptocurrencies are anonymous. Any involvement with money laundering may seriously affect the bank’s credibility and business.
Cryptocurrency exchanges are on the precipice with banks turning their back. According to the current law, every cryptocurrency exchange must prevent money laundering by receiving a real-name account from a bank and this requirement must be met by September this year. Exchanges failing to do so are likely to be forced out.