Earlier this year several banks in South Korea decided to start blacklisting crypto exchanges, meaning that these exchanges had no banking partner to hold their fiat money. Now, a court in South Korea has ruled against the decision, saying it’s unlawful due to the terms stated in the contract that Nonghyup Bank decided to break.
Nonghyup Bank has been known for its bitter attitude towards the crypto industry, but this ruling will force it to continue supporting crypto exchanges for the remainder of their contracts. Setting a precedent, this court ruling is sure to anger the banking sector in South Korea.
The Bithumb Equation
Back in June, South Korean crypto exchange Bithumb was hacked and had almost $30 million in various cryptos stolen. Following this, Nonghyup Bank decided not to renew its contract to provide the crypto exchange with banking services, despite the fact the exchange repaid all investors. However, after a lengthy negotiation process, Bithumb was able to start accepting customer deposits through Nonghyup Bank back in September. This ordeal has shaken the bank’s beliefs and trust in the crypto industry, but it now has no choice but to see out the remainder of the contracts it holds with crypto exchanges.
ICO Ban Holding Firm
The South Korean government implemented an ICO ban towards the end of 2017, and there was talk about reassessing the situation in 2018. Yet, the government’s relationship with the ICO world is still rather frosty and it doesn’t appear as if the ban will be lifted any time soon. The final decision is due at the end of the month, but it’s not looking hopeful for the South Korean ICO industry – so it’ll be great news for crypto-skeptic banks like Nonghyup.
Banks Wary of Crypto
The banking industry as a whole is treading carefully around the subject of crypto and blockchain technology. Some influential figures are making bold claims, such as the banking industry will cease to exist in its current form in only a handful of years. Let’s be honest, if someone told you that you’re going to be pointless in a few years, you would be scared too. Bitcoin has already proven itself to be more than 6,000 times cheaper than using Bank of America for transactions, and banks are looking to assess how best to compete with this new technology.
While Nonghyup was in breach of its contract with several crypto exchanges, this new court ruling will ensure South Korean crypto exchanges can continue to operate for the remainder of the contractual agreements. This gives crypto exchanges in the country time to impress the bank and help change its mind about the crypto world, hopefully ensuring an ongoing partnership as a result. If the exchanges fail to impress the bank, then we could see exchanges moving away from South Korea to a more welcoming jurisdiction.