South Korea will close 196 out of 200 crypto exchanges

The recognition of cryptocurrency as an investment asset and alternative payment mechanism is underwaycontrary to the views of financial regulatorsabout the transparency of transactions. They do not prohibit cryptocurrencies, but they change the legislation in such a way that the main meaning of the cryptosystem is lost - decentralization and independence.

This time, Yuzhnaya took on the task of putting things in order.Korea: On March 25, 2021, amendments to the Financial Institutions Reporting Act (FTRA) came into effect, requiring crypto exchanges to obtain a special license to comply with AML (Anti Money Laundering) and VASP (Separation of Own and Client Assets with Mandatory Account Management) banks of the country).

Since during the month noIn one application, the chairman of the Financial Services Commission (FSC) announced the risk of closing all cryptocurrency exchanges in September this year. According to the regulator, there are about 200 crypto exchanges in the country, and only the Big Four has the necessary agreements with South Korean banks for settlements.

The Big Four meansthe largest players in South Korea: Bithumb, Upbit, Korbit and Coinone - in the first quarter of 2021 they registered 2.5 million new users, and their turnover in January-February reached $ 400 billion. These crypto exchanges have agreements with banks, so the chances of obtaining a license from FSC are high enough. There is little time left for the rest of the players, moreover, large financial investments are required to catch the departing train. Separation of financial flows, conclusion of agreements with banks, auditing and certification by the Internet Security Agency (KISA) are all unprofitable for small startups and crypto exchanges with other registrations. So, one of the world's largest cryptocurrency exchanges OKEx announced in March it was closing its South Korean division, and Huobi Korea is also preparing for a similar step.

South Korea's regulator does not ban cryptocurrencies anddoes not make loud statements about them, however, the tightening of legislation will lead to the disappearance of anonymity when working with licensed cryptocurrency exchanges. After the announcement of the forced closure of unlicensed persons, the quotes of anonymous cryptocurrencies collapsed, which will continue to be delisted.

Image Source: StormGain Cryptocurrency Exchange

Anonymous cryptocurrencies make it impossible to follow the VASP policy, therefore, the day before certification (March 24), Bithumb delisted them.

New rules make cryptocurrency tradingtransparent and more secure, but at the same time its main message is lost - decentralization and independence from financial institutions. Investment interest in cryptocurrencies is growing at an alarming rate for regulators, so their desire to control financial flows is justified. But will tightening up lead to the desired effect? ​​..

Analytical group StormGain