This is the week of the deadline for crypto exchanges as well as wallet operators in South Korea to comply with the new regulatory requirements introduced in order to stay open. Up until now, only one exchange has been granted the license for continuing their operations in the country. It is expected that around 60 crypto exchanges will either shut down fully, or cut down on their services. According to the new ‘Act on the Reporting and Use of Special Financial Transaction Information (Special Act)’, all crypto exchanges in South Korea have to register with the Financial Intelligence Unit (FIU) in the country and get certification for Information Security Management System (ISMS).
The last day to be able to do is September 24th. Crypto exchanges that are unable to do either of these things will have to cease their operations fully. Local media reported that around 34 exchanges have not been granted ISMS certification, which means they will entirely shut down by the given date. Around 29 crypto exchanges do have ISMS certification, but only one of them has managed to register with the FIU successfully. This is part of the country’s top financial regulator, the Financial Services Commission (FSC). On Friday, the Financial Intelligence Unit (FIU) had had their first crypto business review meeting.
Their goal had been to check the report that was submitted by Dunamu Inc. that operates the largest crypto exchange in South Korea named Upbit. The report was accepted by the review committee, which made Upbit the first licensed crypto exchange operator. It was further revealed by the FIU that other than Upbit, there were four other exchanges that had also submitted a report, which included Coinone, Korbit, Korea Digital Exchange (Flybit) and Bithumb. Furthermore, a report was also submitted by Korea Digital Asset (KODA), which is a wallet operator.
The FSC had said back then that since there was only a week left till the deadline, virtual asset providers should file a report right away, if they haven’t already done so. Furthermore, registered crypto exchanges that are interested in offering trading in the Korean won are also required to partner with banks for providing users with accounts verified with their real names. Up until now, banking partnerships have only been secured by the country’s largest exchanges, such as Upbit, Korbit, Coinone and Bithumb. Banks are not willing to partner with smaller exchanges because they are concerned about risks like money laundering.
This means that of the 29 exchanges that have been ISMS-certified, only 25 of them will be crypto-only exchanges in case they register with the FIU successfully. By September 24th, they will have to cease offering trading services in Korean won and should have already notified their clients, as per the rules of the financial regulators. Huobi Korea, Hanbitco, Gdac and Gopax are four companies that said they were still working on securing partnerships with banks by the given deadline. This indicates that out of 63 exchanges, only the leading four will continue to operate normally in the country.