Altcoin Mania Leaves Banking Association of South Korea Worried

Altcoin Mania Leaves Banking Association of South Korea Worried
Image by HeungSoon from Pixabay

Yerevan (CoinChapter.com) — Alarmed over the rise in altcoin trading volumes in crypto exchanges in the country, the Korea Federation of Banks (KFB) has issued a guideline to its members to help regulate crypto trading activities.

The federation has directed member banks to conduct audits on the various altcoins offered by their clients who deal in the exchange of cryptocurrencies. It expressed concern about the potential risks faced by banks from the growing trading mania of unregulated digital currencies, especially the altcoin tokens.

Explaining the plan to protect member banks from possible inconveniences, an official at the Korea Federation of Banks said:

“One of the criteria that we recommend is the safety of digital assets, and that can be measured by the number of digital coins on an exchange. If an exchange deals with too many digital assets, it takes on more risks.”

Altcoin Volumes Explode

KFB’s circular comes when the country is experiencing an unprecedented rise in the popularity of alternative cryptocurrencies.

Meanwhile, their local exchanges registered around a 95 percent spike in the transaction volume of altcoins, led by rallies in Dogecoin, Litecoin, and Ethereum. The largest and most popular cryptocurrency, Bitcoin (BTC), experienced a drop in traction over the weekend, registering a humble 4.26 percent trading volume on South Korea’s largest exchange UpBit.

Investors swarmed towards rising altcoins. Similar trends were also noticeable on Bithumb and Coinone, the other two major cryptocurrency exchanges in the country. Each of these offers over 150 digital currencies on its platforms.

The banking association’s circular is in line with the Anti-Money Laundering Law (AML) passed by the South Korean Parliament earlier this year. The law obliges all VASPs (Virtual Asset Service Providers) to comply with stricter anti-money laundering and terrorist financing prevention rules and reporting duties.

Meanwhile, with altcoin tokens gaining traction, authorities will watch closely to counter the rising altcoin influence in the country.

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