The crypto sector in South Korean was left reeling after all, but four of the country’s trading platforms removed their fiat on/off ramp services and KRW pairings, or completely ceased operations. The platforms had been told to secure banking partnerships based on real-name authentications and also get information security management system (ISMS) certified by today in order to continue their operations. Having just ISMS certification would make the exchanges eligible for offering only crypto-to-crypto services and banking partnerships are required for KRW-related business. Consequently, only the four biggest exchanges in South Korea i.e. Coinone, Upbit, Korbit and Bithumb that had already established banking deals with their partners would be permitted to offer KRW-related services to their clients tomorrow.
However, this is not certain in the long run because regulators are still going over the applications of the four exchanges and it could take up to three months for them issue operating permits. Furthermore, banking contracts are only in effect for six months and if a partner pulls out after the six months, the relevant exchange would not be able to offer KRW services. People who were doing business with the other platforms now have to decide what they are going to do with their coins and money.
This is around 2.2 million account holders who have around USD 2 billion worth of fiat and tokens. A small group of exchanges had attempted to enter into banking deals, with a few negotiations going down to the wire. Having 566,608 account holders, Gopax turned out to be the last one that threw in the towel. It posted on its website that the bank it was negotiating with said that concluding a deal would be difficult. Having 337,981 account holders, Huobi Korea had also made a similar attempt, but accepted defeat on the morning of 24th September.
The other larger and non-big four platforms chose to open altcoin-to-bitcoin (BTC) markets for the convenience of their customers who are holding altcoins. Nonetheless, this fallout will probably widen because until today, there were a total of 63 exchanges operating in South Korea. There is some confusion regarding the number, as some claim there were 66. The big four platforms will certainly reap the benefits because they are likely to see an influx of customers who will no longer be able to use the other exchanges for KRW services. According to some media outlets, almost 30 of the exchanges have completely shut down, but the full extent of the damage will only become clear from next week onwards.
Appeals for more time and clemency made by the industry as well as politicians were rejected by the regulators. Instead, they told customers to file reports to the police and the Financial Supervisory Service if the exchanges don’t approve their withdrawal requests. All exchanges have also been informed that if they decide to cease operations, they have to give at least 30 days to their clients for making a withdrawal. This outcome is likely to create a near monopoly in the South Korean crypto market.