South Korean internet-only KakaoBank joins hands with Coinone

KakaoBank, a South Korean bank that solely operates online, has inked a deal with Coinone, a local cryptocurrency exchange, to give withdrawal and deposit accounts to investors under their real names. This is in compliance with the regulations that are in place in the area.

Despite the fact that the collaboration agreement has been finalized, Kakao has not disclosed a schedule for when it will begin providing Coinone with bank accounts.

Since September 2021, Coinone has already formed a partnership with NH Nonghyup Bank to offer real-name bank accounts. Additionally, NH provides account services for the local crypto exchange Bithumb.

It is imteresting to note that Coinone will be the first local exchange to have two banks host accounts for its customers, and local media raise the possibility that the exchange will terminate its partnership with NH. 

South Korean regulators eyeing strict regulations on exchanges

In order to reduce the risk of users engaging in illegal financial activities like money laundering or embezzlement, South Korean regulators made it mandatory for local cryptocurrency exchanges to acquire bank contracts last year, as TheCoinRise reported. This mandated that users be provided with withdrawal and deposit accounts that were associated with their real names. The permission to operate cash-to-cryptocurrency services was only provided to the exchanges that were successful in meeting the requirement. Upbit, Bithumb, Coinone, Gopax, and Korbit are the five exchanges that have managed to comply with these rules.

Notably, the government is really strict when it comes to fraud and scams. In 2020, a South Korean crypto exchange, CoinUp’s CEO, was sentenced to 16 years in prison for fraudulent activities in the industry. Most recently, Terraform Labs’ CEO Do Kwon is under the regulators’ radar after the depegging of TerraUSD (UST).

Moreover, the “emergency” investigation launched by the South Korean Financial Supervisory Service (FSS) and the Financial Services Commission (FSC) is also keeping an eye on the local exchanges in the nation.