There is not much time before the new rules introduced by the Financial Services Commission (FSC) of South Korea kick in for the cryptocurrency industry. It has been established by the entire cryptocurrency industry in South Korea that these rules may not prove beneficial and supportive to the crypto exchanges in the country.
Many small cryptocurrency exchanges are now living under the fear of strict regulatory bashing. These exchanges have already started losing their confidence and are now fearing that they will get closed soon.
These exchanges are very much fearful about their future in the country and see themselves being shut down forcefully.
One of the major points and conditions in the rule is for the cryptocurrency exchanges to reveal their real name when setting up an account at the banks. The reports reveal that it can be any bank operating in South Korea.
The rule states that the cryptocurrency exchanges need to follow the instructions and act upon them by September 24, 2021. This was also because the banks in South Korea are not okay with revealing themselves as entities dealing with cryptocurrency firms.
Following the announcement of the recent rulings, even the majority of the banks in South Korea have stopped providing services to cryptocurrency firms. So far, only the four major cryptocurrency exchanges in South Korea have proven to be operating with full compliance with the rules and regulations.
There are now rumors that the smaller cryptocurrency exchanges in South Korea are now planning to take very critical action. These exchanges are reportedly considering the option of going against the government of South Korea.
A report from one of the media sources from South Korea has reported that the smaller exchanges may sue the South Korean Government. They may be doing it alleging the government for showing negligence in taking the responsibility of remit of the regulatory bodies.
The new rule that the Financial Services Commission has introduced makes it mandatory for the commercial/local banks to deny/reject providing services to particular cryptocurrency exchanges groups. The particular group is the one that fails to provide a proper identification of their company as well as have suspicious activities taking place on their platforms.
According to the experienced industry officials, by doing this, the financial authorities and the government have deflected their responsibility onto the commercial banks. This way, the banks would have to take the guarantee of such firms when providing services to them.
Now, the banks are responsible for ensuring the information they are gathering from the customers/investors is used for the issuance of the real-name accounts.
However, several commercial lenders, as well as the Federation of Korean banks, have requested the Financial Services Commission to change the rules they expect to accept starting mid-June.