South Korea cracks the whip on crypto exchanges as prices tumble
South Korea’s Financial Services Commission has begun to crack its whip on virtual asset service providers, which basically means the cryptocurrency exchanges, and has asked them to register with itself by September 24.
It also goes on to specify that those exchanges and platforms that are not ready to offer Korean currency-based operations should stop providing the services for the same and they should not be dealing with such fiat currencies any longer unless and until they get registered and licensed to carry on the same. For those who decide to shut it down, the FSC has said that they should be submitting an undertaking that they have done so.
The FSC has also said that those who shut down such operations would need to do so in a manner that the users are not affected by it by giving proper intimation and enough time for the users to learn and understand the new changes and also to withdraw the funds that they want to.
This announcement has come as a big blow not only to the crypto exchanges and traders in South Korea but for the entire crypto ecosystem as such. South Korea has generally been very supportive of the cryptocurrency ecosystem over the last couple of years and the exchanges in the country have been some of the most active ones in Asia during this period with transaction volumes at these exchanges being one of the highest in Asia. This move is expected to affect around 40 out of the 60 crypto exchanges in South Korea and they are expected to shut down in the coming months.
“A situation similar to a bank run is expected near the deadline as investors can’t cash out of their holdings of ‘alt-coins listed only on small exchanges,” said Lee Chul-Yi, head of Foblgate, a medium-sized crypto exchange. “They will find themselves suddenly poor. I wonder if regulators can handle the side-effects.”
Those coins/tokens that are denominated in the Korean won currency are likely to be removed from the exchanges which means that they also would need to shut down. As a result of this announcement, we have seen a large fall in the crypto prices in the morning as a lot of transaction volume is going to dry up from the crypto industry as the Korean won is the third most used fiat currency as far as crypto trading is concerned.