South Korea Regulator Moves to Close 59 Crypto Exchanges in the Country

21 September 2021 | Updated: 21 September 2021

In July, South Korea notified cryptocurrency exchanges and wallet operators to register with the FIU and comply with the new stipulated regulatory requirement before September 24 or risk getting shut down.

Reports show that only one crypto exchange has complied and received licensing to continue operations. That said, 59 cryptocurrency exchanges could go out of service or reduce their score of services.

Per the “Act on the Reporting and Use of Specific Financial Transaction Information (Special Act),” crypto exchanges must get certified by the Information Security Management System (ISMS) and register with the South Korean Financial Intelligence Unit (FIU) before September 24.

Local reports show that 34 exchanges have not received ISMS certification and could completely shut down by Friday.

Meanwhile, 29 crypto exchanges have received ISMS certification, but only one has registered with the FIU.

The FIU hosted its first crypto business review meeting last Friday to review the report submission from Dunamu Inc., the company behind the largest cryptocurrency exchange in South Korea, Upbit.

Meanwhile, the FIU added that four other crypto exchange operators, including Bithumb, Korbit, Coinone, and Korea Digital Exchange (Flybit), have submitted their reports. The regulator also noted that only one wallet operator, Korea Digital Asset (KODA), had submitted its report. The FSC added that:

“Considering that there is one week left until the 24th, virtual asset providers who have not yet filed a report should file a report promptly.”

Only Top Four Exchanges Will Operate as Normal in South Korea

Additionally, the regulatory authority noted that registered exchanges offering to trade in Korean won must partner with banks to provide customers with real-name verified accounts. So far, only Upbit, Bithumb, Coinone, and Korbit have secured partnerships with banks to fulfill the mentioned requirement. Reports show that Korean banks are skeptical about partnering with smaller exchanges due to fears of money laundering and other illicit acts.

That said, along the 63 crypto exchanges operating in South Korea, only the top four—Upbit, Bithumb, Coinone, and Korbit—will continue operations normally. The other 59 might have to either sit down or cut down services.

 

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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.