Out of sixty cryptocurrency exchange platforms in South Korea, thirty-seven platforms failed to meet regulations, closing their business. The other twenty-nine will be running under regulatory scrutiny. However, platforms are struggling to convert cryptocurrency into Korean won. Additionally, the crypto market may witness forthcoming legal breaches with a tighter hold on regulations.
The twenty-nine crypto platforms that registered with banks will be undergoing a legitimizing process. It will take approximately three months, after which the platforms will be given the duly official status to trade in the crypto market. According to the statement published by the Financial Service Commission, the firms are subject to regulatory monitoring and under central administration.
By registering with banks as per the regulations, the South Korean crypto exchanges now comply with global rules on legalities and several other measures laid down by global financial authorities. Any firm failing to do so would result in the closure of the business.
Partnering with local banks with real-name accounts is one of the prerequisites for traders operating within Korea. Some of the crypto exchanges such as Gdac, Gopax and Huoni Korea attempted to have a deal with Korean banks. However, they have failed to meet the guidelines, thereby having to discontinue their trading operations. At present, Upbit, Bithumb, Coinone, Korbit, Upbit are the only four crypto firms that have managed to get real-name accounts at Korean banks.
The global “travel rule” implies a system for anti-money laundering regulations laid down by the Financial Action Task Force. According to the report, twenty-nine crypto firms now have to abide by these regulations as they establish themselves as a legal digital currency trader in the country.
Among the four exchanges that have partnered with local banks with real-name accounts, Upbit has declared a homegrown system for travel rules. In contrast, the other three – Bithumb, Coiinone and Korbit have collaborated to develop the travel rule system.
The forced closure of thirty-seven exchanges that failed to meet the deadlines will not be illegal if they operate in crypto trade affairs. The platforms have been charged with a fine of around $42365 or jail time of around five years.
Although the number appears huge, the trading volume of these companies is 0.1% in the country. Therefore, according to industry experts, their closure will not have a major impact on the market.
It will be interesting to see how the crypto industry evolves post legalizations of crypto exchanges platforms. South Korea is one of the first Asian countries to acknowledge and allow crypto exchanges to breathe and do their business in the digital finance industry.