At the direction of FSC, the main financial regulator of South Korea, 11 cryptocurrency exchanges operating in the country are shutting down. The reason for the closure is illegal activities with finances.
Among the sites that have been banned are such well-known ones as Darlbit and Bitsonic. They engaged in providing services for trading operations with cryptocurrencies. As for the rest of the exchanges, not yet known who else will stop working in South Korea.
At the same time, other crypto exchanges managed to avoid reprisals. These are Upbit and Bithumb, they are the largest exchanges in the state. They were not touched because they strictly comply with all legislative norms in the country, clients are thoroughly checked, all accounts are identified. Therefore, there are no complaints about them. At least for now.
As you know, in South Korea, it is necessary to register a real username if he is going to work on a cryptocurrency exchange. This norm introduced 3 years ago. This done in order to minimize financial fraudulent transactions.
So, every trader obliged to identify himself with a bank account. In this case, the name of the account holder on the exchange must match the name of the account holder.
Banking institutions stop interacting with cryptocurrency platforms
In turn, banking institutions have ceased to expand interaction with local sites, since the risks are too great for them, and the profit is low. However, they have renewed their contracts with the Bithumb exchange until the end of September. Perhaps the contracts will be extended further.
Due to this policy of banks and other violations, other sites were under attack. Since they could not meet all the requirements, they ordered to stop their work in South Korea.
It is worth recalling that legislative restrictions also apply to foreign cryptocurrency exchanges. They should complete documents with the Financial Intelligence Unit (KFIU) by September 24. If they do not, then they will be closed or criminal charges of money laundering brought against them.
Most likely, foreign sites will fulfill the requirements, there is enough time for registration. They are unlikely to want to lose their customers and lose their reputation. As for local crypto exchanges, now they will have to completely leave the market.
Maybe after the disappearance of such a large number of crypto exchanges, platforms from other countries will come to the South Korean market, or others will be created again, but in full compliance with the legislation.
South Korea tightly regulates cryptocurrency activities
On July 26, it became known that South Korea will be able to confiscate cryptocurrency. South Korean regulators have proposed amendments to the legislation to be able to confiscate cryptocurrency from citizens who evade taxes on transactions with digital assets.
In May, South Korean authorities approved a plan to introduce a 20 percent tax on cryptocurrency trading profits. This will affect citizens who earned more than 2.5 million won ($ 2 thousand) a year with the help of digital money. Income below this amount not taxed. The new rules will come into force on October 1, 2021.