South Korea's 60 crypto exchanges to suspend operations

The deadline to notify customers comes today.

More than 60 cryptocurrency exchanges in South Korea must notify customers of a partial or complete suspension of trading by midnight Friday, Reuters reported. The country's new rules for cryptocurrency companies begin to take effect a week later.
Exchanges must register with the Korea Financial Intelligence Unit (KFIU) by Sept. 24 to continue operating. Exchanges not registered with the KFIU must close.

Crypto exchanges must also ensure that customer names are de-anonymized for banks in the country. After Sept. 24, Korean credit institutions will not be able to serve individual investors whose names will not be reliably known. If an exchange registers with the KFIU but fails to provide customer identification, it will be banned from trading in the won.

South Korea's 60 crypto exchanges to suspend operations

Violators of the new rules face criminal liability, as well as fines of 50 million won ($43,000).

The deadline to notify customers of the exchanges' plans comes today, Sept. 17:

"Exchanges must notify customers of expected closing dates and withdrawal procedures at least seven days before closing," the regulator said earlier this week.

According to the government, 35 of the 63 trading platforms have not received new certificates. Another 28 have KFIU certifications but have not secured customer identification.

The certification process takes three to six months. Exchanges that have not yet received approval will find it "virtually impossible" to get it in time, the regulator's spokesman Business Times reports.

Only four organizations - Upbit, Bithumb, Coinone and Korbit - have registered and met the condition to de-anonymize customers.  They account for about 97% of the country's trading volume, according to ruling party lawmaker Roh Woon Rae last week.

ProBit, Bitfront, Cashierest and Flybit have already said they will stop local currency transactions. The crypto exchanges are asking their customers to identify themselves or withdraw funds.
Who will be affected

Investors who bought "Kimchi coins" will suffer the most from the shutdown of the smaller exchanges, Bloomberg estimated. That's what the cryptocurrency community calls tokens developed in South Korea. Digital asset trading is very popular in the country - the Korean won is the sixth most popular fiat currency in the world for cryptocurrency trading, according to Coinmarketcap.
"Kimchi coins are only traded on small exchanges. The closure of these trading venues would cause traders to lose $3.4 billion, according to an estimate by the chairman of the Korea Blockchain Society provided by Bloomberg. The Financial Times estimated the scale of the losses at $2.6 billion.
As a reminder, South Korean regulators also intend to tighten the rules for collecting taxes from participants in the cryptocurrency community who evade them. South Korea's Minister of Strategy and Finance Hong Nam-Ki promised that the tax on cryptocurrency income will take effect on January 1, 2022.
FX24

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