Briefly-
- The financial regulator in South Korea sets a deadline for crypto exchanges to register as authorized trading platforms.
- Local cryptocurrency exchanges struggle to meet the financial regulator’s conditions.
- Crypto traders in the country might witness losses in kimchi tokens worth more than $2.6 billion.
South Korea’s FSC (Financial Services Commission) declared another deadline for local and international crypto sites to list as authorized trading platforms. As the nation aims for stiffer regulations towards the crypto industry, almost two-thirds of exchanges might shut down.
The Consequences
South Korea’s financial watchdog declared that local and foreign cryptocurrency exchanges had to registers as legal platforms before September ends. Meanwhile, most trading platforms battle to meet the regulator’s conditions. That might lead to the shutting down of almost 40 crypto sites by 24 September.
For now, four leading crypto exchanges dominate the nations’ digital asset industry – Coinone, Bithumb, Korbit, and Upbit. These trading sites account for more than 90% of South Korea’s overall cryptocurrency trading volume.
The head of crypto research and a professor at Korea University, Kim Hyoung-Joong, said that smaller exchanges might shut down, consequently ending kimchi coins. These are altcoins listed on the local crypto exchanges and trades on the nation’s native currency (Korean won).
For the cryptocurrency exchanges to achieve legal status, they have to collaborate with local financial institutions for traders to open accounts using their real names. Meanwhile, Korean banks remain skeptical due to the associated risks such as money laundering.
By now, nearly 20 exchanges complied with the regulator’s conditions. They did so by providing functionalities to collect personal data. However, some analysts trust that these crypto operators have minimal survival chances due to their businesses’ limited size.
Korea Finance Consumer Federation president Cho Yeon-haeng stated that investors might incur heavy losses due to suspended trading services. Remember, several smaller exchanges will see their digital assets frozen with the move.
If the cryptocurrency exchanges fail to comply before the declared deadline, FSC told the crypto companies to notify their clients about a possible closure by 17 September. If any crypto operator offers trading services without the needed registration, they will attract a fine of around $43,500 or imprisonment of up to five years.
