September 13, 2021, | AtoZ Markets – The South Korean cryptocurrency market is one step away from losses of $2.6 billion due to the decision of local authorities to increase pressure on cryptocurrency exchanges, Financial Times (FT) is reporting with reference to representatives of local business.
Two-thirds of Korean crypto exchanges to shut down
It is reported that almost two-thirds of crypto exchanges (40 out of 60) in South Korea are under threat to shut down. The closure is due to the short registration deadlines set by the local financial regulator.
As AtoZ Markets reported, the regulator mandated all foreign and local crypto exchanges to obtain a license by September 24, 2021.
For this, crypto exchanges must cooperate with local banks. However, local financial institutions are not happy with the cryptocurrency business. They fear being drawn into money laundering and other financial crimes, the FT notes.
However, even with registration with the regulator, medium-sized crypto exchanges will still face stiff competition. For example, the South Korean market is dominated by four cryptocurrency exchanges: Upbit, Bithumb, Korbit, and Coinone. They account for more than 90% of the total volume of crypto transactions in the country.
According to the head of the local cryptocurrency exchange Foblgate, Lee Chul Yi, cleaning up the crypto market can have strong "side effects." According to him, most traders will simply be deprived of the opportunity to monetize altcoins, which are traded mainly on small exchanges.
Read also: South Korea to Ban Crypto Exchanges from Cross Trading
The tightening of regulation of the local crypto market is taking place against the backdrop of the development of the central bank's digital currency (CBDC). Back in mid-June 2020, the South Korean Central Bank appointed a legal advisory group to explore the possibility of launching a CBDC.
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