South Korea’s top financial regulator will shut down 11 cryptocurrency exchanges allegedly engaged in fraudulent bank account schemes, local media reported. Meanwhile, the deadline for all crypto exchanges to comply with the country’s regulation is drawing near and most of them have not been able to meet the requirements.
11 Crypto Exchanges Could Be Shut Down
- South Korea’s top financial regulator, the Financial Services Commission (FSC), will reportedly shut down 11 cryptocurrency exchanges, The Korea Herald reported Monday, citing unnamed industry sources.
- The 11 crypto exchanges allegedly used fraudulent collective bank accounts and the FSC plans to notify prosecution and police of the alleged illegal activities, the sources added, noting that the exchanges will find it impossible to get approvals from the FSC to continue their businesses. The names of the exchanges have not been disclosed.
- Crypto exchanges must obtain approval from the FSC by Sept. 24 to continue operations. Some efforts to provide more time for exchanges to comply with regulations, such as by People Power Party Congresswoman Cho Myeong-hee, who hoped to extend the deadline until Dec. 24, have been dismissed. The FSC stands by its Sept. 24 deadline, stating that crypto exchanges have already been given a six-month grace period.
- One of the requirements is for crypto exchanges to partner with local banks to open real-name accounts for customers. However, banks have been reluctant to partner with exchanges other than the top four: Bithumb, Upbit, Coinone, and Korbit. Without the ability to offer real-name accounts, exchanges will have to cease operations.
- Several mid-sized exchanges have already announced plans to shut down or suspend services, the publication conveyed, adding that Darlbit went out of business on July 15. CPDAX said on July 30 it will terminate services on Sept. 1, emphasizing: “It is not a temporary but a permanent measure to close business. Those who possess cryptocurrencies in the account must withdraw them before 3:00 p.m. on Aug. 31.”
- Another requirement is that exchanges must obtain an Information Security Management System (ISMS) certificate. Many crypto exchanges in South Korea also find it difficult to meet the requirements for this certification. The publication noted that Bitsonic exchange, for example, announced on July 30 that it will temporarily stop providing services to renew its service systems in order to meet the ISMS requirements.
What do you think about the FSC shutting down 11 exchanges and many more will have to shut down due to their inability to comply with the upcoming regulation? Let us know in the comments section below.