South Korea’s leading financial regulator will shut down eleven cryptocurrency exchanges allegedly involved in fraudulent bank account systems, local media reported. Meanwhile, the deadline for all crypto exchanges to comply with the country’s regulations is approaching, and most of them have failed to meet the requirements.
11 crypto exchanges could close
- South Korea’s leading financial regulator, the Financial Services Commission (FSC), will reportedly close 11 cryptocurrency exchanges, The Korea Herald reported on Monday, citing unnamed industry sources.
- The 11 crypto exchanges allegedly used fraudulent collective bank accounts and the FSC plans to inform prosecutors and police of the alleged illegal activity, the sources added, noting that exchanges will be unable to obtain approvals from the FSC, to continue their business. The names of the exchanges were not disclosed.
- Crypto exchanges must obtain approval from the FSC by September 24th to continue operations. Some efforts to give the exchanges more time to comply, such as People Power Party Congressman Cho Myeong-hee, who was hoping to extend the deadline to December 24th, have been turned down. The FSC is sticking to its September 24 deadline and states that the crypto exchanges have already been granted a six-month grace period.
- One of the requirements is that crypto exchanges work with local banks to open real name accounts for customers. However, banks were reluctant to partner with exchanges other than the top 4: Bithumb, Upbit, Coinone and Korbit. Without the ability to offer real name accounts, exchanges will have to cease operations.
- Several midsize exchanges have already announced plans to close or suspend services, said the release, adding that Darlbit ceased operations on July 15. CPDAX said on July 30th that it would cease services on September 1st, stressing, “It is not a temporary but a permanent business closure measure. Those who have cryptocurrencies in their account must withdraw them on August 31st before 3:00 p.m. “
- Another requirement is that exchanges must acquire an Information Security Management System (ISMS) certificate. Many crypto exchanges in South Korea are also struggling to meet the requirements for this certification. The publication states that, for example, Bitsonic Exchange announced on July 30th that it would temporarily suspend the provision of services for the renewal of its service systems in order to meet the ISMS requirements.
What do you think of the FSC having to close 11 exchanges and many more because they cannot comply with the upcoming regulation? Let us know in the comment section below.
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