New regulations are set to take hold in South Korea this week that could force dozens of crypto exchanges to suspend trading services unless they meet regulatory requirements.
South Korea’s new regulation is set to come into effect this week, and dozens of crypto exchanges are likely to suspend services because of it.
Crypto exchanges in a tough spot
The country’s financial regulators announced the new regulatory framework earlier this year, giving crypto exchanges a deadline to implement the required measures. Over 60 exchanges are likely to suspend services this week alone.
In order to resume services, these exchanges will have to register with the Financial Intelligence Unit by Sept 24. Failing to do so will result in a complete shutdown of the exchange. For now, the exchanges must inform customers that there will be a partial or full suspension of trading services by midnight on Sept 24.
Four exchanges, Upbit, Bithumb, Coinone, and Korbit have completed the required registration and bank partnerships. Forty exchanges are confirmed to be acquiescing to the request, while an additional 28 have not yet secured the required bank partnerships.
One of the key factors driving this new regulation is KYC/AML compliance. South Korean authorities have been adamant that exchanges implement better processes with respect to this, and it has since upended exchanges’ operations. The country is among those putting in the most effort to regulate the market.
Korean regulators clamping down
From the start of the year, South Korean regulators have not been pulling punches when it comes to market regulation. Among the many actions, it has taken include scrutinizing tax evasion and implementing requirements for a fully regulated crypto exchange. The latter relates to the current predicament exchanges are in.
In total, 11 exchanges have already shut down so far this year, following failure to meet KYC/AML standards. Reports on this matter allude to fraudulent accounts and that they will not be able to receive approval from the Financial Services Committee in the future.
Still, the market is flourishing in the country despite the heavy regulation that is coming into place. Banks have reported a 100% increase in revenue from cryptocurrency transaction fees, which can only mean growth. Crypto firm Hashed has also launched a $170 million blockchain fund, which could prove highly successful.
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