The 200 crypto exchanges in South Korea may face closure by September as per Eun Sung-soo, the chair of South Korea’s Financial Services Commission. The decision would be based on the new anti-money laundering laws(AML) that came into force last year and also included cryptocurrencies. As per new regulations, crypto exchanges operating in the country must implement all the AML guidelines and partner with local banks, and become information security management certified.
The government opened the registration window from March 25 for crypto exchanges to obtain their virtual asset service provide licenses, none of the 200 exchanges have applied for the license, and the final date of approval has been set for September 24. If crypto exchanges fail to register themselves by the end date, they would have to shut their operation.
Would New AML Regulations Create a Hurdle for Growing Crypto Ecosystem in Korea?
South Korea is one of the most active crypto markets in the world also famous for the Bitcoin ‘Kimchi’ premium. Kimchi premium is the Bitcoin price difference between Korean exchanges and American exchanges which at the peak was around 20% and has come down to below 2%. The new AML regulations threaten to take away the budding market from South Korea.
At present, out of 200 exchanges, only 4 top crypto exchanges have a partnership with local banks. The regulatory body in the country has been recently quite critical of the cryptocurrency space despite the majority of the world changing their passive stance and looking to formulate better crypto regulations. The South Korean regulator recently said that cryptocurrencies are more volatile and speculative than other assets.
South Korea had also imposed a 20% tax on crypto gains. Many other countries have tried taking a similar approach towards digital assets but have failed miserably and have gone back to regulate keeping wider adoption in mind. America’s similar approach leads to many established crypto companies move out of the States.