Sandbank, a South Korean bank specializing in virtual assets, says it is in the process of acquiring the necessary certification to operate legally in the country. However, financial authorities have yet to decide whether their requirements apply to crypto banks.
- In a announcement, Sandbank told customers that it has made acquiring Information Security Management System (ISMS) certification a top priority. ISMS certification is a requirement for virtual asset companies to become a legitimate business operator with the Financial Services Commission of Korea (FSC). Sandbank has already applied for certification and is awaiting review.
- Korean financial authorities have not clearly defined whether virtual asset banks, which pay interest on a virtual asset deposit, are subject to the new requirements.
- Sandbank DA: Ground Developer COO Paik Hoon-jong said Forkast. News: “The lack of authoritative interpretation of what a virtual asset bank is has subjected Sandbank to much misunderstanding and criticism. But we are trying to meet the government’s requirements for [virtual asset] the operators.”
- Meanwhile, the FSC’s deadline for exchanges and crypto operators to meet new regulatory requirements is less than a month away. A virtual asset business that does not comply with regulations after September 24 is at high risk of closure.
- The revised FSC Law on the Declaration and Use of Certain Information on Financial Transactions, also known as the Crypto Exchanges Law, came into effect on March 25 of this year. In an effort to improve investor protection and the transparency of crypto transactions, the law gives operators of virtual assets six months to comply with certain requirements. ISMS certification is its first requirement, designed as a way for crypto companies to prove that they have sufficient safeguards to protect user information. The new regulations also require crypto exchanges to acquire banking contracts so that customers can have withdrawal and deposit accounts in their real name, to reduce the risk of crimes such as money laundering or price manipulation. . The law also requires executives of a virtual asset operator to have no financial crime related charges in their background for the past five years.
- While 20 of the 79 crypto exchanges in South Korea have achieved ISMS certification, only four – Upbit, Bithumb, CoinOne, and Korbit – hold banking contracts. In addition, only Upbit succeeded in having the banking contract extended by K-Bank, its partner, and in registering with the FSC. Other exchanges are still struggling with compliance as some banks are unwilling to sign contracts for fear of being involved or liable for crypto-related crimes. Several major banks, including KB Kookmin, Hana, and Woori Bank, have said they will not be affiliated with crypto exchanges. As a result, many smaller scholarships such as Allbit, Darlbit and CPDAX, have closed, citing the new regulations as the reason.