The deadline for cryptocurrency exchanges and wallet operators to comply with the new regulatory requirements to stay open in South Korea is this week. So far, only one crypto exchange has been licensed to continue operations. About 60 crypto exchanges are expected to either shut down or reduce services.
60 Crypto Exchanges Expected to Shut Down or Reduce Services
Under the “Act on the Reporting and Use of Specific Financial Transaction Information (Special Act),” crypto exchanges must be Information Security Management System (ISMS)-certified and register with the South Korean Financial Intelligence Unit (FIU) by Sept. 24. Crypto exchanges that fail to do either must cease operations on that date.
According to local media, 34 exchanges have not received ISMS certification, so they are expected to shut down entirely on Sept. 24.
A total of 29 crypto exchanges have been ISMS-certified but only one has successfully registered with the FIU, a unit of the Financial Services Commission (FSC), the country’s top financial regulator.
The Financial Intelligence Unit held its first crypto business review meeting Friday to review the report submitted by Dunamu Inc., the operator of Upbit, the largest crypto exchange in the country. The review committee accepted the report, making Upbit the first licensed crypto exchange operator in the country.
The FIU further revealed Friday that besides Upbit, four other crypto exchange operators have submitted a report: Bithumb, Korbit, Coinone, and Korea Digital Exchange (Flybit). In addition, a wallet operator, Korea Digital Asset (KODA), has also submitted a report.
The FSC said:
Considering that there is one week left until the 24th, virtual asset providers who have not yet filed a report should file a report promptly.
In addition, registered crypto exchanges that want to offer trading in Korean won must also partner with banks to provide users with real-name verified accounts. So far, only the country’s largest exchanges — Upbit, Bithumb, Coinone, and Korbit — have secured banking partnerships. Banks are reluctant to partner with smaller exchanges due to risks such as money laundering.
That means, 25 crypto exchanges out of the 29 that have been ISMS-certified will be crypto-only exchanges if they successfully register with the FIU. They must cease offering trading in Korean won by Sept. 24 and should have already notified their customers as required by the financial regulators. Four companies — Gopax, Gdac, Hanbitco, and Huobi Korea — said they are still working to secure banking partnerships by the deadline.
Currently, out of 63 crypto exchanges, only the top four exchanges will continue to operate as normal. The rest will either shut down or reduce services.
What do you think about all these crypto exchanges having to shut down under the new regulation? Let us know in the comments section below.