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Crypto exchanges in South Korea could shut down by September 24, 2021. Regulators in the region plan to close trading platforms due to compliance issues. Failure to meet regulatory standards could attract losses worth 3 trillion Korean Won. The value is equivalent to $2.6 billion.
Trading Platforms Prepare for Exit
Today, local crypto exchanges struggle when trying to uphold guidelines set by the government. In most cases, traders need to reveal their personal information to perform trades in the exchanges. Doing that means that digital currency exchanges have to team up with a local bank.
The requirement goes against the basic principle of privacy within the crypto space. As of now, close to 20 exchanges are observing these rules set by the government. Thus, almost 40 trading platforms face the risk of termination if they fail to meet the regulator’s conditions.
There are several penalties for operating without any legal registration. Lawbreakers could incur a fine of up to $43,500 or a five-year jail term.
On the bright side, more significant crypto exchanges such as Bithumb and Upbit have legal permission to operate. The four exchanges, including Upbit, Bithumb, Coinone, and Korbit, manage almost 97% of the region’s trades.
More on the Upcoming Crackdown
A leading cryptocurrency researcher admits that smaller exchanges face the highest risk of closure. The crackdown could freeze countless digital assets in the exchanges. Kimchi coins are among the virtual currencies that might fall if the small trading platforms go out of business.
Kimchi coins usually operate in local crypto exchanges. What’s more, investors trade these coins with the Korean Won. Shutting down the trading platforms can lead to the elimination of altcoins, such as the Kimchi asset.
It also means that the liquidity levels may get lower, making it difficult to make any exchange. As the deadline gets near, users have the option of cashing out their crypto holdings. That way, investors can retain their funds and avoid any losses.
The future of crypto regulation in South Korea remains uncertain. However, South Korea’s government continues to work with the crypto industry to apply several policies. The region’s primary focus is to fight against financial crimes such as money laundering.