South Korea closes a third of the country’s crypto exchanges
New crypto exchange regulations in South Korea are likely to shut down 24 out of 63 crypto exchanges in the country.
The regulations are set to be enforced in less than a month, and authorities are persistent in extending the deadline despite objections from the crypto industry.
A third of the region’s crypto exchanges are expected to close by the deadline, according to a press release from the South Korean Financial Services Commission (FSC). Said exchanges have yet to meet compliance requirements, which were part of a measure enforced earlier this year.
The FSC set September 4 as the deadline for exchanges to prepare a report and submit it to the Financial Intelligence Unit (FIU) if they are to continue operating in South Korea. However, many exchanges listed in the FSC’s press release failed to meet the first requirement of the new crypto regulations.
Exchanges are required to gain Information System Management System (ISMS) certification with the approval of the Korea Internet & Security Agency (KISA). This would confirm that the applicant has successfully established a system that guarantees the security of the user information.
The ISMS application process takes three to six months, and the 24 selected exchanges have not yet applied for certification to KISA, less than a month by the registration deadline. It is currently very unlikely that they will be able to meet before the stated date.
The ISMS is now reviewing applications submitted by 18 other exchanges, while 21 out of 63 have already received certification.
As stated in the press release, the exchanges that filed the application could still be rejected by KISA. In this case, they will also be forced to close after the September 4th deadline. In addition, it was stipulated in the FSC document that securing the ISMS certification does not grant the exchanges a free ticket for operation according to the new rules.
After receiving the KISA certificate, exchanges are expected to win a banking contract as a second requirement. The contract is designed to enable exchange users to withdraw real names and deposit bank accounts in order to remove loopholes for financial crime.
If the two requirements are met, then crypto exchanges can then submit a business registration report to the FIU for review.
The FSC even went so far as to issue a warning at the end of the press release advising users to take preventative measures and withdraw their cash and crypto deposits in the event of an exchange suddenly closing.
South Korea has actively strengthened its crypto-surveillance and regulatory measures. Earlier this month there were reports that regulators were closing eleven crypto exchanges for illegal activity and fraudulent collective accounts.
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