Tonight, several of the existing crypto exchanges in South Korea will halt operations due to their failure to meet registration requirements by the Financial Services Commission (FSC). This means by Saturday morning, crypto users in the Asian country would be left with only four duly registered exchanges and other few ones, while noncompliant ones would be out.
Recall that months ago, the FSC mandated exchanges to carry out 2 registrations with the authorities. The First of the registration involves obtaining an Information Security Management System (ISMS) certification to prove their ability to manage and secure their users’ personal information.
The second requirement was for them to partner with a commercial bank in Korea, which would help users facilitate withdrawal and deposit using their genuine bank accounts that bear their real names. This move was made in order to curb illicit activities associated with crypto.
However, only four of the 64 exchanges in Korea have fully complied with the requirements. Among the four, Upbit has been duly registered to operate legally, while the applications of the other three eligible exchanges are under review. As soon as they see approval, they will become the few legal, operational exchanges in the country.
On the contrary, dozens of exchanges who have failed to meet either of the requirements would end operation within the next few hours. Meanwhile, 24 exchanges which failed to secure bank partnerships but obtained ISMS certification have been restricted to only token-to-token operation with immediate suspension of cash-to-crypto transactions.
These embattled exchanges failed to secure a partnership with local banks because most of the banks do not want to associate with virtual assets-related firms. Banks like KB Kookmin, Woori, and Hana Bank refused any form of affiliation.