South Korean regulators have held an emergency meeting ahead of a crucial day that could see the vast majority of the country’s crypto trading platforms shut down before a regulatory deadline on September 24, with many others removing fiat deposits and cryptocurrency trading.
Per Donga and Maeil Kyungjae, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) held an unscheduled summit to determine which exchanges are already closed and which now only offer crypto-to-crypto trading.
To do the latter, trading platforms must have obtained the certification of the Information Security Management System (ISMS).
So far, only the” big four ” exchanges – Upbit, Korbit, Coinone and Bithumb – have secured the banking partnerships that allow them to continue providing services related to HKD. Despite frantic eleventh-hour talks with banks of four others, it seems that all in one have now conceded that they will not make the deadline after all.
Donga quoted a Gopax official as saying that it is still ” negotiating with a financial company to issue a real deposit and withdrawal account”adding that its”HKD market will continue to function normally, at least for now.”
But the FSC stated:
“We have confirmed that 24 exchanges have informed clients that they will terminate or suspend their FOREX market services by posting notices on their websites.”
However, EDaily reported that the number of platforms with ISMS certificates was actually 43, with three of these platforms receiving their documentation within a very short time. The media company reported that Delio, the blockchain company, and Lawdians had received their certificates in recent days and have now reported this fact to regulators.
The Ministry of Science and ICT, which oversees the certification process, reminded the industry that ISMS certificates are valid for three years, after which companies must apply for new documentation.
“We will create a secure cryptoasset service environment by ensuring that cryptoasset operators who have received ISMS certification maintain their certification properly,” the ministry was quoted as saying.
Meanwhile, Koh Seung-beom, the chairman of the FSC, warned investors:
“If you use a [exchange] that has not received ISMS certification, you should be very careful because there is a risk of harm.”
This will be a faint comfort to the millions of customers who do business with non-“big four” platforms. Data compiled by the office of opposition People’s Power Party MP Kang Min-guk showed that a total of 2,216,613 account holders have wallets on the 18 largest platforms that are supposed to stop trading – with tokens and fiat worth $ 2 billion in their wallets.
Gopax users – all 566,608 of them-will now have to wait nervously to see if the exchange can secure their banking business before the end of business hours, while 438,823 Dove Wallet and 337,981 Huobi Korea account holders will be restricted to crypto-to-crypto market activities.
All this will come as relatively positive news for the” Big Four”, who could find themselves the only players in town this weekend.
They are also strengthened by the news that the cumulative value of deposits on the four major exchanges has crossed the USD dollar mark, Chosun reported.
Meanwhile, another international exchange with a relatively large base of South Korean users has taken steps to distance itself from the domestic market.
BitMEX wrote on its website that “with the introduction of new local regulatory requirements in South Korea on September 24, 2021,”Korean language materials would be removed from its website and trading platform,” although it added that ” all other services will remain unaffected.”
Binance and Singapore-based Bybit trading platform have both taken similar steps before.
BitMEX concluded by stating:
” We fully support the efforts of regulators to create standards for cryptocurrency products that support the advancement of this rapidly growing asset class.”