In a meeting of the National Assembly’s policy committee, the chair of the Financial Services Commission (FSC), Eun Sung-soo, announced that as per a recently amended law the platforms have to submit their requests for an official operating license. The regulatory deadline is approaching and if banking difficulties don’t get resolve it will need to shut down.

All crypto exchanges need to show proof of using real-name accounts with South Korean banks to be considered for a license. The issue is that domestic banks have mostly declined to provide risk assessments for the country’s numerous small-medium-sized exchanges, opting instead to service the country’s major four trading platforms: Upbit, Bithumb, Korbit, and Coinone. From March 25 the FSC began accepting registration applications but no exchanges have applied yet. The deadline for all licensing applications has been extended till September 24.

As per Eun Sung-soo “There are an estimated 200 cryptocurrency exchanges in the country.” SouthKorea’s anti-money laundering (AML) law, the Financial Transactions Reporting Act (FTRA), which was amended last year to apply to crypto exchanges were the Law that Eun was referring to in his announcement.

On April 19, a statement was issued by the government’s policy that authorities will implement a “special enforcement period” from April to September to close down any “illegitimate crypto businesses” and will make sure that exchanges are abiding by the FTRA.  

The firm that runs Gopax is called Streami, and it was funded by Shinhan, one of South Korea’s largest commercial banks.

The reaction saw due to new regulations

According to experts, the new licensing restrictions will cause up to 40 of South Korea’s estimated 60 crypto exchange operators to shut down. The Financial Services Commission, which oversees enforcing the new rules, has supported them saying traders need a greater security for their funds kept on smaller cryptocurrency exchanges. The banks are also not happy with these new regulations.

Other government-induced regulations faced by South Korea's traders

In January 2018, during a press conference, the country’s justice minister announced about his ministry “preparing legislation that effectively prohibits cryptocurrency trading” and that the ministry’s goal was to “shut down all exchanges.” Park went on to equate crypto trading with “gambling.”

Indrani bose

CBW - External Analyst

INDIA