The South Korean crypto sector has faltered after all but four of the country’s trading platforms either shut down operations or removed Fiat HKD pairings and Fiat on/off ramp services.
The platforms were instructed to secure real-name authenticated banking partnerships and to obtain the certification of the Information Security Management System (ISMS) to conduct bank-related business to this day. However, only with ISMS accreditation, exchanges will still be allowed to offer only crypto-to-crypto services.
This means that only the” big four ” exchanges – Upbit, Korbit, Coinone and Bithumb – that have already completed banking transactions with their existing partners will be allowed to offer US-related services to their customers from tomorrow. But even this is not certain in the long run: regulators are still reviewing the applications of the four exchanges and could take up to three months to issue operating permits.
In addition, bank contracts are effective only for six months. If a banking partner withdraws after that, the exchange in question would also have to stop its services.
Those who have done business with non-big four platforms – 2.2 Million account holders with tokens and fiat worth UD 2bn – now have to decide what to do with their money and coins.
A small group of major exchanges had hoped to complete banking transactions – with some negotiations going straight to the wire. Gopax, which has 566,608 account holders, was the last to throw in the towel, posting on its website today that the bank it had been negotiating with had told it it would be “difficult” to strike a deal.
According to Seoul Kyungjae, Huobi Korea, which also hoped to close a last-gasp deal and has 337,981 account holders, announced on the morning of the 24th
Most major (non-big four) platforms have opened altcoin-to-bitcoin (BTC) markets to help altcoin holding customers trade more easily.
But the fallout is expected to expand. To date, there have been at least 63 fully functioning exchanges in South Korea, Seoul Kyungjae reported, while KBS puts the number at 66.
A crypto trader named Kim (first name withheld) said:
“I’m lucky enough to have an account on an ISMS-only platform and one with [one of the big four], so I can just transfer my coins. However, I’m not sure everyone else will be so lucky. I imagine Upbit and the rest will lick their chops when the new customers come in.”
TVChosun quoted Hwang Se-woon, a research fellow at the Korea Capital Market Institute Economic Think Tank, as saying:
” I think it is necessary [for traders] to switch to exchanges that can continue trading.”
The same media company reported that 30 trading platforms appear to have completely failed, although the full extent of the damage is unlikely to become clear until next week at the earliest.
The regulators, who had flatly rejected requests for clemency and more time – from both politicians and industry – called on customers to report to the financial regulator and the police if they reject their withdrawal requests. All exchanges have been told that if they stop trading, customers can withdraw money for at least 30 days.
Dailian reported that the result would be the creation of a “near monopoly” – noting that 98% of all BTC traded in South Korea is already traded on “big four” platforms – with 83% of that number going through Upbit alone. Smaller exchanges-which are taking their DIGITAL services offline today-mainly specialized in the altcoin markets.
An unnamed exchange official was quoted as saying that a lack of competition would ultimately harm customers, with listings and delistings being made “arbitrarily” and “transaction fee changes” also being made “arbitrarily”.”
On Reddit, posters noted that “foreigners” are now “effectively” blocked from crypto exchange activity. While some suggested that VPN solutions could help non-Korean merchants living in the country, one Redditor explained:
” It’s not about web access, it’s about banking services. Foreigners living here cannot deposit or withdraw fiat locally.”