South Korean banks are further distancing themselves from bitcoin following the government’s ”emergency” regulation which bans them from di...
South Korean banks are further distancing themselves from bitcoin following the government’s ”emergency” regulation which bans them from direct involvement in cryptocurrency-related activities. Shinhan Bank and KB Kookmin Bank have announced that they are discontinuing their points for bitcoin exchange services in January.
Also read: South Korea Clarifies Position After Reports of Possible Ban on All Crypto Transactions
Major Banks Move Away From Bitcoin
Two major Korean banks announced this week that they are discontinuing their “credit card points for bitcoin swap” services, Korea Biz Wire reported. Shinhan Bank will discontinue its service on January 15 and KB Kookmin Bank on January 22. The news outlet explained that currently:
KB Kookmin Card and Shinhan Card points can be redeemed for bitcoins at cryptocurrency exchange Coinplug, which has partnership agreements with both banks.
Banks’ Rewards Systems Explained
Shinhan Bank’s rewards system, called the Shinhan Fan Club, allows customers to collect and spend points accumulated on their Shinhan credit cards. Points are earned when the cards are used for services at seven Shinhan affiliates: Shinhan Bank, Shinhan Card, Shinhan Financial Investment, Shinhan Life, Shinhan Capital, Jeju Bank, and Shinhan Savings Bank.
KB Kookmin Bank has a similar rewards system. Its service, called Liiv Mate, allows customers to collect and spend points on the bank’s credit cards.
Points accumulate when customers use KB Kookmin credit cards at KB Kookmin Bank, KB Insurance, KB Kookmin Card, KB Investment & Securities, KB Life Insurance, KB Capital, and KB Savings Bank. “Customers can earn reward points with their transactions at those seven companies and use their points like cash at shops associated with KB Kookmin Card,” Korea Times noted.
The two banks partnered with Coinplug to allow their credit card points to be redeemed for bitcoin.
Regulation Drives Korean Banks Out of Crypto Space
When the government announced its emergency measures for cryptocurrency regulation earlier this month, Choi Hong-sik, the governor of the Korean Financial Supervisory Service, was quoted by Yonhap saying:
We will prohibit financial institutions from directly entering or trading in virtual currency markets.
Ever since Choi “expressed the government’s intention to ban financial services firms from directly dealing or setting up shop in the cryptocurrency market, banks have one by one halted their cryptocurrency-related offerings,” Korea Biz Wire added.
Most major banks have already stopped issuing virtual bank accounts to cryptocurrency exchanges, as previously reported by news.Bitcoin.com. Virtual accounts are needed for trading cryptocurrencies in Korea.
In September, a service that allowed the purchase of cryptocurrencies using credit cards at the country’s leading bitcoin exchange Bithumb was shut down, two months after it launched. At the time the country’s financial authorities pointed out that “the service could be exploited by criminals using counterfeit credit cards,” the news outlet conveyed.
Do you think banks distancing themselves from cryptocurrencies will have a huge impact on the Korean crypto markets? Let us know in the comments section below.
Images courtesy of Shutterstock, Shinhan Bank, KB Kookmin Bank.
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