Smaller crypto exchanges in South Korea will be closing their doors in the next 24 hours

Smaller crypto exchanges in South Korea will be closing their doors in the next 24 hours
Failure to meet South Korean regulators' new requirements is expected to wipe out tens of smaller crypto exchange operators in the country within the next 24 hoursCanva
  • Many of South Korea’s smaller crypto exchanges are going to be shutting down in the next 24 hours.
  • According to the Korea Herald, only 28 out of the 66 identified crypto exchanges in the country meet the requirements for a license.
  • Even so, banks are reluctant to tie up with smaller crypto exchanges due their questionable credit history.
Dozens of cryptocurrency exchanges in South Korea will be informing users of partial or complete shutdowns within the next 24 hours. The move is a part of new regulations in the country, which require crypto exchanges in the country to acquire a license from the country’s Financial Intelligence Unit (FIU). They will also have to partner with banks in order to continue.

The deadline for acquiring the license is September 24, meaning many exchanges will not be able to meet the deadline.. Reuters estimates that more than 60 exchanges will have to shut down in part or completely by midnight today — either because they haven’t acquired the license or they haven’t been able to partner with a bank. This could mean a massive $2.6 billion loss for traders in the country, according to the Financial Times.

Who’s going to be left standing?

Analysts told the Korean Economic Daily that the crackdown will mostly impact smaller exchanges because local banks are reluctant to tie up due the questionable credit of these exchanges.

As per the Korea Herald, only 28 out of 66 identified exchanges in South Korea have the appropriate system designated by authorities designed to proactively limit any security breaches required to be eligible for a license — 10 others tried, but were denied.

Only the four biggest crypto exchanges – UPbit, Bithumb, Coinone and Korbit – have real-name bank accounts issued by commercial banks. They are responsible for 97% of the trading volumes recorded in the country.

Tax regulations still hang in the balance

Talks of regulating cryptocurrencies have been brewing in South Korea for a while. The country is one of the top 10 adopters of cryptocurrency, according to a report by market research firm Finder from last month.

Yesterday, the country’s Minister of Strategy and Finance and former Prime Minister of South Korea , Hong Nam-Ki, said that Korea’s crypto tax code will come into effect from January 1 next year despite moves like the majority to try and postpone its implementation to 2023.

The new tax code, which has faced some controversy, seeks to levy 20% tax on income from crypto transactions over 2.5 million KRW.

The crypto tax code has been postponed multiple times in South Korea. The Korea Blockchain Association had opposed the bill and called for postponement shortly after it was passed last year. Koh Young Jin, the National Assembly Secretary of South Korea had also supported postponing the bill in May this year.

For a more in-depth discussion, come on over to Business Insider Cryptosphere — a forum where users can deep dive into all things crypto, engage in interesting discussions and stay ahead of the curve.

Insider trading, IP theft, fake art and fake profiles — Scammers are taking advantage of NFT platforms’ lack of regulation

Crypto market in the red as Solana remains the most heavily hit