Virtual currency exchanges ‘sit on fire’ when the government tightens management – Illustration: AP
Specifically, according to the newspaper Financial Times (FT), the Financial Services Commission (FSC) of Korea, the country’s financial regulator, has set a deadline of September 24 to require all domestic and foreign virtual currency exchanges to register with the agency. regulatory authority to operate legally.
This regulation is part of the Korean Government’s efforts to tighten management of the business and investment of virtual currencies, which are growing very strongly in the land of kimchi. South Korea is one of the largest cryptocurrency markets in the world.
However, it is worth mentioning here that most of the domestic cryptocurrency exchanges in Korea do not meet the conditions of the regulator to be able to operate legally.
According to the newspaper’s source FT From industry insiders and regulators in South Korea, nearly 40 of the approximately 60 owners of virtual currency exchanges are expected to close after September 24.
Currently, virtual currency trading activities in Korea take place mainly on the four largest exchanges, Upbit, Bithumb, Korbit and Coinone. These four exchanges account for more than 90% of the total cryptocurrency trading volume in South Korea.
According to the estimate of Professor Kim Hyoung Joong – in charge of the Virtual Currency Research Center at Korea University, the closure of a series of smaller exchanges will also wipe out 42 domestic virtual currencies.
This currency is still commonly referred to as “kimchi coins” – alternative cryptocurrencies listed on domestic exchanges and often traded primarily in Korean won.
Industry statistics show that non-bitcoin cryptocurrencies account for about 90% of virtual currency transactions in South Korea.
Mr. Lee Chul Yi, head of mid-range exchange Foblgate, said that a situation similar to the massive withdrawal of money from banks near the deadline of September 24 is likely to happen.
The FSC recommends that exchanges that cannot meet the conditions of the regulator to continue operating should notify customers of the possibility of floor closing before this Friday (September 17).
In order to be licensed to operate a legal virtual currency trading business, exchanges in South Korea must cooperate with local banks to open real-name registered bank accounts for their customers. However, local banks are opposed to this for fear of facing money laundering and other financial crimes.