With Korea’s financial regulator closely monitoring crypto exchanges, Kimchi Coin users may have to withdraw their deposits before Sept 24. Around two-thirds of crypto exchange traders are likely to close by the end of September.
The new regulations will have a tight hold over crypto exchanges, the Korea Financial Intelligence Unit announced on Sunday. Korea Internet and Security Agency will be closely working with FSC for reviewing crypto exchanges platforms in Korea.
In a meeting held on Sept 6 with Virtual Asset Service Providers, the regulatory body discussed the guidelines for crypto exchanges. “For VASPs that are planning to operate a virtual asset trading platform but are not planning to offer [Korean currency]-based or other fiat currency-based exchange services, the authorities advised them to terminate their fiat currency based exchange services without delay by the Sept 24 registration deadline,” the PR stated.
According to the announcement, every crypto exchange will have to register with the Finance Service Commission. Those failing to do so will be shut down by Sept 24. Such crypto platforms will have to inform their customers of any possible shutdown by Friday latest.
To be a certified crypto trader, crypto platforms are required to collaborate with banks and open legit bank accounts for customers. At present, there are 60 crypto exchanges in the country. However, only one-third are certified. As a result, the remaining ones will be forced to close their business, according to the report. The loss of crypto trading platforms is predicted to be around $2.6 billion. Besides, 27 foreign crypto exchanges operating for Korean platforms have been given notice by the FSC.
The new regulations intend to put an end to the fraudulent exchange unduly using user’s money. Since a certification for their information security management system is mandatory for crypto exchanges, it will streamline the procedure to manage data, preventing any security violation.
The Financial Service Commission is reviewing every crypto exchange, including Upbit, Bithumb, Coinone and Korbit, some of the largest crypto exchanges in the country. The four companies control around 90% of the country’s total trading volume.
The Korea Finance Consumer Federation president, Cho Yeon-haeng, spoke to the media this week. “Huge investor losses are expected with trading suspended and assets frozen at many small exchanges as customer protection will not likely be the priority of those exchanges facing an imminent closure,” he said in the announcement.
With this, it will be obligatory for banks to decline any money transfers to uncertified crypto exchanges. Additionally, banks are told to be aware of suspicious transitions and inform the same to financial authorities.