As of midnight Friday, some 35 digital asset exchanges will be defunct, as the country enacts new consumer safety regulations.
Crypto investors will have less than 50 percent of current exchanges to choose from for their trades by midnight. South Korea’s new crypto exchange legislation will take effect immediately on Saturday when 35 exchanges that have not met with the new crypto exchange standards will be forced to close operations. The remaining are four large exchanges and 24 minor ones that may stick around once all cash-transaction-supporting features are removed.
Two fundamental criteria were established by the Financial Services Commission (FSC). Exchanges must first obtain an Information Security Management System (ISMS) accreditation, demonstrating their ability to safeguard users’ personal data.
The next step is a collaboration with a Korean bank to provide cryptocurrency exchange users with real-name bank accounts for withdrawal and deposit. This aims to reduce the risk of money laundering, embezzlement, and pricing manipulation.
Out of 63 crypto trading platforms, only four major exchanges — Upbit, Bithumb, CoinOne, and Korbit — have fully met the standards and submitted a compliance report to the Financial Intelligence Unit (FIU). The FIU has evaluated and approved Upbit’s report, while the other three are still being investigated. These four exchanges will be the only digital currency exchange platforms capable of providing all services legally once they acquire the green light.
For the other crypto exchanges, it’s a different matter altogether. In less than a day, 35 exchanges that failed to achieve the two standards will be removed. Twenty-four exchanges that received the ISMS certification but not the bank agreement have been instructed to focus entirely on token-to-token exchanges and stop offering cash-to-crypto operations.
These exchanges were scrambling to link local banks because Korean won-to-crypto trades account for approximately 90% of total digital asset transactions in the country. Major banks, though, such as KB Kookmin, Woori, and Hana Bank, have declined to participate in digital asset exchanges. The majority of the 24 exchanges have now ceased their cash-to-crypto operations.
Only Gopax, a medium-sized exchange, has promised users that a bank collaboration was on the way. Users who pre-registered for real-name withdrawal and deposit accounts were even given a special Bitcoin giveaway. Gopax was said to be in talks with Korea’s regional Jeonbuk Bank about forming a collaboration. However, Gopax declared on the morning of the deadline that their real-name account contract had fallen through and that the Korean won services will be shut down soon.
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