SEOUL, Sept. 17 (Korea Bizwire) — Medium-sized cryptocurrency exchanges in South Korea have discontinued trading pairs and payment services using the Korean currency as financial regulators are set to enforce tougher rules, according to market watchers Friday.
By next Friday, both foreign and local cryptocurrency exchanges targeting Korean investors must register with the nation’s anti-money laundering body and have real-name bank accounts.
If they have no real-name bank accounts, cryptocurrency exchanges will be banned from withdrawing money for cryptocurrency trading.
Currently, only four major exchanges — Bithumb, Upbit, Coinone and Korbit — have real-name bank accounts issued by commercial banks.
Also, the tougher rules require cryptocurrency exchanges to get a security certificate from the nation’s internet security agency. Financial regulators said 28 out of 63 exchanges have obtained such a certificate.
Excluding the major four exchanges, 24 exchanges, which obtained the certificate, can continue their businesses after Sept. 25, but they will be unable to continue trading pairs using the Korean currency, because they have no real-name bank accounts.
Some medium-sized exchanges, including Flybit, Coredax and Foblgate, have suspended trading pairs using the Korean currency or announced the suspension of such trading.
The exact amount of cryptocurrencies traded on medium-sized or small exchanges is unknown, but market watchers said they account for about 5 to 7 percent of total cryptocurrency trading in South Korea.
For months, worries about regulatory crackdowns have hammered prices of smaller coins and some minor exchanges voluntarily discontinued operations or delisted smaller coins.
According to a report released by the office of Rep. Kim Hee-gon of the People Power Party, the combined trading volume of the four major exchanges stood at 401 trillion won (US$340 billion) at the end of June, compared with 1,322 trillion won a month earlier.
Korean investors had been heavily buying virtual currency, considering it a lucrative asset amid the coronavirus pandemic.
Especially, young people had been investing in cryptocurrencies, anticipating higher returns, with some saying they cannot buy homes solely with their incomes amid skyrocketing home prices.