South Korean crypto observers are predicting a “tectonic change” in the crypto exchange sector after a fifth trading platform struck a banking deal that will allow it to resume crypto-to-fiat trading.
Yonhap reported that Gopax, one of the largest of the non-“big four” exchanges (Upbit, Bithumb, Coinone, and Korbit), has struck a deal with Jeonbuk Bank, a newer, regional bank that will allow its customers to return to the fiat markets.
A senior employee at one of Gopax’s rivals told Cryptonews.com under the condition of anonymity that this development was cause for “quiet optimism” – adding that their trading platform was “continuing to speak to” domestic banks about a possible deal of its own.
Smaller banks have eyed the runaway success of Upbit’s partner, the neobank K-Bank, which has seen its user base swell as a result of its crypto exchange partnership. However, a major prohibitive factor has been the fact that the South Korean government has told banks that they must absorb all potential risks associated with crypto exchange business. Many banks have been scared off by concerns that hacks or incidents of money laundering on partner platforms could damage their international standing.
Yonhap added that Gopax’s journey to join the “big four” is not over yet. The firm will now have to report the fact that it has a banking deal in place to the Financial Information Unit, an agency that reports to the top regulatory body, the Financial Services Commission.
Gopax will also need to apply for a fiat won-trading license. However, providing the exchange and its banking partner’s paperwork is submitted according to protocol, it should now be a matter of “when” rather than “if” it can resume offering KRW pairings.
iNews24, which predicted a “tectonic change” in the landscape for South Korean crypto traders, quoted an unnamed industry insider as stating that “the fact that Jeonbuk is a regional bank is quite positive” – a suggestion that regional banks may also follow suit with Gopax rivals, including the likes of Hanbitco, Huobi Korea, Foblgate, Flybit and others.
A number of these firms, Cryptonews.com has been informed by crypto industry workers and consultants, have at least held talks with smaller regional banks about the possibility of striking partnership deals.
The same media outlet quoted the same insider as explaining that “local banks have a wider range of operations than the five biggest commercial banks.”
The insider predicted,
“Jeonbuk Bank can build an active cooperative relationship with the exchange, rather than entering into a push-and-pull relationship with exchanges in a bid to attract young people to their banks.”
The bank was established in 1969 and is headquartered in Jeonju, North Jeolla Province.
As previously reported, all but the big four crypto exchanges – which all have banking deals with much larger commercial banks – were forced to either cease operations or obtain Information Security Management System (ISMS) certification and remove fiat trading options after key regulatory measures came into force in September last year.
A number of small and medium-sized crypto exchanges decided to do the latter, switching to crypto-to-crypto trading as they continued to pursue banking deals. These deals ensure that all fiat-to-crypto and crypto-to-fiat trades are conducted via real name-verified bank accounts in a bid to stamp out anonymity in crypto trading.
But the switch to crypto-only trading effectively stranded the platforms in crypto-to-crypto purgatory, whereby customers had no choice but to use “big four” fiat ramps.
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