South Korea to Suspend Operation of Crypto Exchanges Next Week

With the global advancement and development currently being experienced by cryptocurrency, several countries are beginning to take strategic measures to safeguard their cryptocurrency sphere. This is important because crypto losses when incurred can be huge thus affecting a country’s financial system. One of such countries taking the security of its cryptocurrency sphere seriously is South Korea. The FSC, which is the regulatory body in the country, set the deadline for the registration of both local and foreign exchanges for September 24. This registration would see crypto exchanges being listed as legal trading platforms. 

This compulsory registration is one of the several strategies by the government to tighten security and properly monitor crypto operations within the country. All crypto exchanges that wish to continue operations within the country must be registered before the deadline elapses. Failure to do so would result in the suspension of trading activities. Presently, about two-thirds of the total crypto exchanges in the country are likely to have their activities suspended. This would represent about sixty out of the total crypto exchanges in South Korea. Furthermore, the suspension on these exchanges can either be partial or total based on the implementation of this legislation. 

Crypto Exchanges in South Korea And Present Requirements

The present times are challenging for the 66 crypto exchanges present in South Korea as they are mandated to complete a compulsory registration process. Each exchange is required to register with the country’s Financial Intelligence Unit before September 24th from which they must be provided with a security certificate if they want to stay operational. After this registration, every exchange must form a partnership with a local bank where they will create real bank accounts for every customer. Any exchange that fails to register at all before the deadline would automatically have its operations completely suspended. 

For exchanges that have registered but do not secure a partnership from a local bank, they will be restricted from trading in won which is more or less partial suspension. All these efforts are geared towards making the country’s cryptocurrency sphere a secure one even as the world is moving to integrate crypto fully into financial systems. With these regulations in place, about forty crypto exchanges are set to fully suspend their operations in the country. Just four out of sixty-six exchanges have registered and have also secured partnerships with local banks. Amazingly, these four exchanges account for about ninety percent of South Korea’s trading volume and so are the dominating crypto exchanges in the country. 

Impact of The Suspension of Crypto Exchanges

Presently, there are only four crypto exchanges that have successfully met all the conditions highlighted by the FSC. This implies that the rest of the exchanges would be suspended either partially or fully which would, in turn, lead to severe losses for the country’s crypto market. In addition to this, the suspension would lead to investors losing about KRW 3 trillion which is equivalent to $2.6 billion. Experts are however optimistic that more exchanges would meet the requirements before the deadline.