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Friday, Sep 17, 2021

Korea: Regulator to Shut Down 11 Crypto Exchanges, Deadline Closing In

Korea: Regulator to Shut Down 11 Crypto Exchanges, Deadline Closing In

According to local news, South Korea’s financial regulator will shut down 11 cryptocurrency exchanges allegedly engaged in fraudulent bank account schemes. At the same time, the deadline for all crypto exchanges to comply with the country’s regulation is closing in and most have not been able to meet the requirements.

South Korea’s financial regulator, the Financial Services Commission (FSC), reportedly will shut down 11 cryptocurrency exchanges, The Korea Herald reported Monday, according to unnamed industry sources.

The reason for the closure is that the 11 exchanges allegedly used fraudulent collective bank accounts and the FSC plans to notify prosecution and police of the alleged illegal activities, the sources added, noting that the exchanges will find it impossible to get approvals from the FSC to continue their businesses.

The names of the exchanges have not been disclosed.

Crypto exchanges must obtain approval from the Korean regulator by Sept. 24 to continue operations in the country. Efforts to provide more time for exchanges to comply with regulations have been dismissed. Power Party Congresswoman Cho Myeong-hee hoped to extend the deadline until Dec. 24, without success. The FSC stands by its Sept. 24 deadline, stating that crypto exchanges have already been given a six-month grace period.

One of the requirements is for crypto exchanges to partner with local banks to open real-name accounts for customers. However, banks have been reluctant to partner with exchanges other than the top four: Bithumb, Upbit, Coinone, and Korbit. Without the ability to offer real-name accounts, exchanges are not able to operate in the country. This means also foreign based crypto exchanges servicing Korean customers.

Several mid-sized exchanges have already announced plans to shut down or suspend services. Darlbit went out of business on July 15. CPDAX said on July 30 it will terminate services on Sept. 1, emphasizing: “It is not a temporary but a permanent measure to close business. Those who possess cryptocurrencies in the account must withdraw them before 3:00 p.m. on Aug. 31.”

Another requirement is that exchanges must obtain an Information Security Management System (ISMS) certificate. Many crypto exchanges in South Korea also find it difficult to meet the requirements for this certification. The publication noted that Bitsonic exchange, for example, announced on July 30 that it will temporarily stop providing services to renew its service systems in order to meet the ISMS requirements.

Source: Korea: Regulator to Shut Down 11 Crypto Exchanges, Deadline Closing In – Fintechs.fi

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