It is stated that after September 24, the day when the time given for exchanges to comply with the regulation conditions in South Korea, 2.6 billion dollars worth of crypto money may evaporate from the country.
As is known, the country’s Financial Transactions Reporting Law requires all cryptocurrency exchanges to comply with the Financial Services Commission (FSC). In order for exchanges to comply with anti-money laundering and “know your customer” rules, they are required to only accept non-anonymous accounts and negotiate with local banks as well.
There may be a “bank exit” crisis
Regarding the issue, the FSC stated that they have to warn their customers in case of any closure of the exchanges that will not comply with these rules. It is stated that 40 of the 60 exchanges still do not report that they comply with the regulation rules. Experts, on the other hand, comment that this may lead to a “bank exit” crisis. Bank exits or escapes are attempted in traditional markets as the company tries to withdraw its customers’ money within the same time frame for fear that it will terminate its services. Therefore, it is considered that some small cryptocurrency exchanges may have difficulty meeting the demand in the face of a mass withdrawal.
“90% of transactions are in ‘Kimchi coins’…
Lee Chul-yi, the head of Foblgate, a medium-sized exchange, said in a statement on the subject, “It will be difficult to exit money for some altcoins listed only on small exchanges. Customers may suddenly find themselves lacking in peace. “I doubt whether regulators will be able to deal with this situation,” he said.
In the report of the Financial Times, it was stated that 90% of the trades in South Korea were made in altcoins, especially in coins called “Kimchi” developed by Koreans.
“There will be big investor losses”
According to Kim Hyoung-joong, head of the Cryptocurrency Research Department at Korea University, about 42 kimchi coins will be removed from the market after the regulations come. According to Cho Yeon-haeng, head of the Korean Federation of Financial Consumers, there will be huge investor losses due to asset freezes and trading suspensions. Therefore, consumer protection will not be achieved.
Technology giant LINE’s subsidiary is also cutting ties with South Korea
Cryptocurrency exchange Bitfront, which is a subsidiary of Japan-based LINE, the giant technology company of the Far East region, will cut off its relations with the country. The exchange is expected to end its Korean-language service on Tuesday and also stop payments made with South Korean credit cards.
Last month, Binance, seen as the world’s largest exchange, removed trading pairs and payment options with South Korean won.
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