Most of S. Korea's cryptocurrency exchanges likely to close under new rules
Updated: 2021-04-20 16:56:32 KST
A new crypto regulation that took effect on March 25th, has put the smaller exchanges in South Korea which make up only a fraction of the nation's crypto trading volume at risk of closing down by the end of September, or possibly even sooner.
To prevent cryptocurrencies from being used for money laundering, the exchanges now have to register their business with the Financial Intelligence Unit the country's anti-money-laundering agency within 6 months and have to meet AML requirements, such as identifying their customers, and keeping records of their transactions.
To get registered, each exchange must partner with bank that will create a certified account for it, through which customers will send money to the exchange.
By opening this account, the bank would be vouching for the security of the exchange, and taking responsibility for AML monitoring as well.
Reluctant to take on this responsibility, banks are subjecting the exchanges that apply for accounts to strict screening of their transparency, risks and business practices.
According to Yonhap News Agency, only the four biggest exchanges Bithumb, Upbit, Coinone and Korbit have clinched such an arrangement with a bank so far.
An expert says he expects very few exchanges to qualify.
"It's very difficult for small and medium-sized cryptocurrency exchanges to qualify under this new regulation. I think only about 5 or 10 exchanges will succeed in registering by September 25th. The others that are not ready should be preparing to close down, and there need to be discussions about how to protect the crypto investors who use these exchanges."
He advised caution when investing in cryptocurrencies, and to be aware that the exchanges could suddenly shut down.
Kim Jae-hee, Arirang News.