Two-thirds of crypto trading platforms in South Korea are expected to cease their operations by the end of September.
According to a law passed in 2020, South Korean crypto exchanges must comply with several new rules. They must complete the ID verification procedures and communicate questionable transactions to an anti-money laundering unit called Korea Financial Intelligence Unit (KoFIU).
The regulatory action affects nearly 60 platforms operating in the country.
It is now rumored that 40 out of 60 domestic crypto exchanges will be shut down by authorities because of not complying with the new regulations. The crackdown of smaller trading platforms could bring many issues. Especially when it comes to altcoins.
Crypto exchanges that offer their services to customers from South Korea were given two months to register with the country’s anti-money laundering body. The KFIU communicated to digital currency trading platforms. They were called to fulfill the requirements and new regulations set by the government.
The platforms were also called to obtain a certificate on information security from South Korea. If they don’t comply with all the requirements set by the watchdog, exchanges must cease offering their services to Korean clients after September 25.
“If they continue to operate without registration, they will be subject to up to five years of imprisonment or a maximum fine of 50 million won (US$43,455).”
About 90% of traded volume of the South Koreans’ crypto accounts is made of altcoins. The FSC has already advised these platforms to notify their customers before September 17. But will that be enough?
“A situation similar to a bank run is expected near the deadline as investors can’t cash out of their holdings of ‘alt-coins’ listed only on small exchanges. […] They will find themselves suddenly poor. I wonder if regulators can handle the side-effects.”
South Korea has been trying to set up new crypto regulations. The main reason is to protect its citizens from fraud and fight money laundering. Back in June, the Financial Services Commission instructed banks to treat exchanges as high-risk clients to diminish.
Because I need it. But help me. Just help me. Come help me. But come with me. But help me.