Korea’s Mandatory Crypto Real-Name System Neglected – 19% Conversion Rate
South Korea’s real-name system for cryptocurrency trading has been enforced for over a month, but most accounts have not been converted to the new system. Banks are still not converting accounts for most crypto exchanges and the government will not force them or investors to use the new system.
After 1 Month – 19% Conversion Rate
One month after the implementation of the government-mandated real-name system, the conversion rate of virtual accounts from the old system to the real-name system in South Korea is only 19%, No Cut News daily newspaper reported. “There is still a large number of investors who do virtual currency trading without [the] real name change.”
According to the news outlet, Bithumb’s conversion rate of 15% is the lowest, while Coinone’s 26% is the highest. In addition, none of the banks have converted accounts for small and medium-sized exchanges. The news outlet described that during the month:
Of the total 169,500 accounts, 19% completed the real-name conversion. Only one out of five people who use virtual currency transactions use real-name conversion services.
Shinhan Bank has previously issued 125,000 virtual accounts, 28% of which have been converted into real-name ones. Industrial Bank of Korea (IBK) has converted 34,000 virtual accounts out of 127,791, putting its conversion rate at 22%.
Nonghyup Bank has been issuing the largest number of virtual accounts to crypto exchanges. It has converted 90,000 out of 139,000 virtual accounts at Bithumb, and 26,000 out of 100,000 accounts at Coinone, the publication described. The bank recently started issuing new virtual accounts for crypto exchanges. As of Friday, it has opened a total of 174,000 virtual accounts using the real-name system for Coinone and Bithumb, Seoul Finance detailed.
Still No Conversion for Small Exchanges
The real-name system went into effect on January 30, putting a stop to the anonymous trading of cryptocurrencies within the country. Six banks have this system installed, but only three of them are converting virtual accounts for crypto exchanges: Shinhan Bank, Nonghyup Bank, and IBK. Furthermore, they only service the country’s top four crypto exchanges: Upbit, Bithumb, Coinone, and Korbit.
The lack of real-name conversion is a major problem for over 25 small and medium-sized exchanges. The Korean Financial Supervisory Services (FSS) is aware of the problem and has urged banks to rectify the situation. However, ultimately, it is up to banks to decide whether to provide the services. An FSS official was quoted by No Cut News:
We aimed to secure transaction transparency and prevent money laundering through a bank real name account…It is out of our goal and authority to manage more than that.
No Reasons to Convert Accounts
According to the publication, a large number of investors do not feel the need to convert their account to the real-name system. “Even if you do not switch to real names, you can still buy and sell virtual currencies with your existing money,” the news outlet wrote and quoted Hong Ki-hoon, a Hongik University professor of business administration, commenting:
I think that there will be abuse cases with name accounts such as one person using a real name account and this person acting on behalf of another person.
In addition, he finds the current efforts by the financial authorities to prevent money laundering, such as banning minors and foreigners from cryptocurrency trading, “somewhat satisfactory,” the news outlet conveyed. Citing the speculative nature of the cryptocurrency market, the professor believes that “The government’s intention to catch speculative demand will be difficult to keep up.”