South Korea Regulators Will Shut Down Crypto Exchanges Found Defaulting the “New Requirements”
South Korean financial regulator FSC has warned crypto exchanges to abide by the new regulatory infrastructure or face the consequences. In June, the regulators in the country laid out new requirements for the registration of crypto exchanges, citing that any platform found defaulting would be shut down.
The requirements state that each crypto exchange will have to verify its real name is registered in a Korean Bank and used for operation before or on September 24. This implies that any unregistered platform will have no access to bank services. With the deadline fast approaching, all exchanges are mandated to place requests for a license from the FSC. However, the new requirements don’t seem to go well with smaller operators.
Smaller Operators Object to the Requirements
Many operators fear that the new framework from the financial regulator will force them out of business. Since the news came to light, the various platforms have considered several ways to counter the new law, including suing the government over its negligence to play their role. According to them, the government alongside the FSC shouldn’t have allocated such a huge responsibility to banking institutions.
However, the FSC has come out to justify its position on the issue, citing the move was due to growing demands of customers to protect their assets, especially those held in smaller crypto platforms. Therefore, they would have no reason to interfere in banks’ vetting processes. Yet, some banks have refused to partake in any kind of assessment procedure for the operators, except for the top trading ones in the country. .
As a result, experts predict that more than 40 of these operators in the country will shut down. They accuse the FSC of using the framework to monopolize the market for the country’s top exchanges and shut down smaller operators. Analysts are not just concerned about the closure of the smaller platforms; they worry about the number of coins listed.
According to Kim Hyoung-Joong, a university professor, shutting down these platforms will destroy 42 altcoins listed on such exchanges. If this happens, it means that investors won’t be able to cash out of their altcoins in their wallets. Consequently, they will lose money and become poorer. However, the FSC has reportedly told operators who plan to shut down should notify their clients on or before September 17 to avoid massive losses. The FSC claims that “investors’ losses” are a priority.
The new FSC measures will curb any fraudulent activity in the crypto space and safeguard customers’ assets on crypto platforms. With the younger generation piloting into cryptocurrency, this move is a necessity.
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