A new regulatory overhaul could put 40 out of 60 exchanges out of business in South Korea after the firms are expected to fail to meet the conditions that are being proposed by the Financial Services Commission (FSC). This action may likewise impact holders of in your area utilized “kimchi” coins, that won’t be able to trade them for fiat in other exchanges. This might bring losses of more than $2.6 billion.
South Korea Exchange Options to Reduce Drastically
A regulatory overhaul might reduce drastically the number of exchanges operation in South Korea. According to FEET, it is expected that 40 of the 60 exchanges that run in the nation will be closed due to the failure to adhere to the brand-new regulatory structure provided by the Financial Services Commission. This rule, which has a deadline for next September 24, establishes that all exchanges need to register with the institution to operate in the country.
However, much of these exchanges have no other way of adhering to the essentials to do so. The law states that every crypto exchange must partner with a baking institution to open real-name bank accounts for customers. However, banks have actually declined to do so to prevent being connected to cash laundering cases.
Closures Will Hit Local Tokens
This crackdown will also have unintended consequences for local investors. The closure of the little exchanges not able to adhere to these guidelines has the capacity of bringing $2.6 billion in losses to Korean financiers. This is because these exchanges list the so-called “kimchi coins,” a group of 42 small alternative cryptocurrencies that are used only by local investors. If these exchanges do close, liquidity for exchanging these coins will vanish.
Cho Yeon-haeng, president of Korea Finance Consumer Federation, mentioned:
Huge investor losses are expected with trading suspended and assets frozen at many small exchanges as customer protection will not likely be the priority of those exchanges facing an imminent closure.
International exchanges are likewise impacted by the step and requirement to register with the FSC. The institution has told exchanges that before closing its doors they need to notify users about the fact on September 17. The step will even more centralize cryptocurrency services in the nation, with Upbit, Bithumb, Korbit, and Coinone, the most significant exchanges, most likely capitalizing from the exodus of consumers to authorized platforms.
