Many of South Korea’s 200 cryptocurrencies are facing an “existential crisis” as they struggle to meet regulatory requirements in the wake of the turmoil in one of the world’s largest cryptocurrency markets.
In order to gain a business license as a legal trading platform, Korean stock exchanges are required to open real-name bank accounts for their clients at partner local banks. But banks are concerned that this could leave them responsible for money laundering in digital currencies.
Now, the Financial Services Commission is due a deadline of September 24 և Only a few exchanges are expected to meet the requirements, reflecting the pressure on thousands of cryptocurrencies that have arisen around the world as global regulators tighten the store.
“Many [global crypto] “The industry is afraid of a big-four regulated exchange scenario similar to South Korea,” said one crypto market executive.
South Korea’s cryptocurrency is dominated by four major exchanges: Upbit, Bithumb, Korbit և Coinone. They are expected to survive as they have contacted banks such as Shinhan, NH և K-Bank to offer real securities trading accounts. Upbit և Bithumb announced that they are going to register with FSC.
Smaller exchanges say the new regime prefers larger operators at their own expense. “We are facing a crisis of existence. “We want to legalize our business, but the banks do not want to offer us real-name accounts,” said Lee Chul, head of Foblgate, the country’s fifth-largest stock exchange with 100,000 members.
“There will be more problems if all these exchanges remain to work in the gray area. We may have to take our business offshore. ”
However, some experts say that more regulatory oversight is needed, as many stock exchanges in the country do not have the means to protect investors և transparent transactions.
“The market is overloaded with too many trading platforms. “Official registration is necessary to clear the market, although there may be short-term confusion,” said Huang Seiwu, a researcher at the Korea Capital Markets Institute.
The possible shutdown of many exchanges could ease the cryptocurrency frenzy in South Korea, one of the world’s most vibrant cryptocurrencies, once the country joins. Global pressure on digital assets whose prices have been under pressure since mid-April a wave earlier this year.
Young South Koreans have proven to be enthusiastic buyers of virtual assets, which helps ensure a higher price for bitcoin in Korea compared to other countries such as the United States. The premium fluctuated sharply, but rose above 20% last week, according to data provider CryptoQuant.
“The new law puts us in place,” said a leading bank official. “It will be difficult for us to open new transactions in cryptocurrencies, given the risks associated with cryptocurrency trading, until the government gives us clear guidance.”
Banks’ conservative policies have been exacerbated by recent warnings from the financial authorities about cryptocurrencies. Bank of Korea Governor Li Yoo-yun said in February that cryptocurrency had no “internal” value.
The country’s chief financial regulator Yun Sun-sun said during a parliamentary hearing last month. “It simply came to my notice then [investors] do not enter [this market]”Cryptocurrency cannot be recognized as a currency, so the government cannot protect those who invest in virtual assets.”
South Korea has a large population for cryptocurrency. The daily turnover on local stock exchanges exceeds $ 20 billion, which triples the daily trading volume of retail investors in the country.
But it remains largely an unregulated market, prompting regulators to crack down on any “illegal activities involving virtual assets” during the “special enforcement period” from April to June.
The government also plans to pay 20 percent tax on capital gains from the sale of more than Won2.5 million ($ 2,200) starting next year.
These measures did not discourage young people from buying digital coins against the backdrop of high youth unemployment and rising housing prices.
“The stock market is boring for me, with little volatility. You can get rich quick with crypto investments, even if the risks are greater, “said 30-year-old tennis coach M.H.