In recent months, Eun Sung-soo, head of South Korea’s Financial Services Commission, announced that 200 crypto exchanges operating in the country may close by September. With the deadline approaching, the fears seem to be coming true.
The regulatory agency in South Korea has ordered 60 crypto exchanges to partially or completely cease their services and notify customers about it by midnight on Friday. These exchanges are expected to be shut down for not complying with the latest regulations, which will come into effect next week.
To continue operating in the country, cryptocurrency exchanges must register with the anti-money laundering agency Fiscal Intelligence Unit by September 24 and partner with banks to offer real bank accounts. Only a few of the hundreds of crypto exchanges in South Korea have met the requirements of the new AML guidelines, and the remaining hundreds of small and medium-sized crypto exchanges are preparing to close their doors.
The Financial Services Commission (FSC), the country’s chief regulatory body, stated in a statement on the matter:
“If some or all services are required to be closed, (exchanges) should notify customers of the expected closing date and withdrawal procedures at least seven days before closing”
South Korea Intensifies Pressure Against Illegal Crypto Exchanges
In January of this year, South Korea issued a new AML proposal that requires crypto exchanges operating in the country to register with anti-money laundering agencies and obtain a license. According to the new regulations, crypto exchanges operating in the country; It needed to implement all AML guidelines, establish partnerships with local banks and be certified in information security management and enforce strict KYC policies.
The first determined last transaction date was determined as March; however, exchanges failed to meet many of the requirements, in hopes that regulators would reconsider strict policies. As a result, the FSC extended the deadline to 1 June and then to September, without making any concessions on its compliance policies. As a result, most small and medium-sized crypto exchanges are expected to be forced to shut down as they cannot meet their compliance requirements.
At the time of writing, it is reported that there are only 4 exchanges that will continue to offer full service after the new regulations take effect. Known as the Big 4; The Bithumb, Upbit, Coinone and Korbit exchanges managed to persuade banks to take on this huge task and the associated risk.
In a speech on exchanges on Thursday, April 22, FSC chairman Eun Sung-soo stated that more exchanges should be closed, this is how the Korean government can protect crypto investors.