Crypto Carnage expects Korean 2.2MS account holders on Friday
South Korean regulators held an emergency meeting ahead of a crucial day, which could see the vast majority of the country’s crypto trading platforms shut down before a regulatory deadline of September 24, with many more removing KRW escrow deposits and KRW-crypto trading.
Per Donga and Maeil Kyungjae, the Financial Services Commission (FSC) and Financial monitoring service (FSS) held an unscheduled summit to see if they could determine which exchanges have already closed and which now only offer crypto-to-crypto exchanges.
To do this, trading platforms must have obtained Information Security Management System (ISMS) certification.
So far, only the “big four” exchanges – Upbit, Korbit, Coinone, and Bithumb – secured the banking partnerships that will allow them to continue to offer KRW-related services. Despite frantic last-minute talks with the banks of four others, it appears that all but one have now conceded that they will miss the deadline after all.
Donga cited a Gopax official as stating that he was still “in negotiations with a financial firm to issue a real name deposit and withdrawal account”, adding that his “KRW market will continue to operate normally” – for now at least.
But the FSC noted:
“We have confirmed that 24 exchanges have informed customers that they will end [or suspend] their KRW market services by posting notices on their websites.
However, EDaily reported that the number of platforms holding ISMS certificates was actually 43, with three of them getting their documentation in no time. The media reported that Delio, the Blockchain company, and Lawdians had obtained their certificates within the last few 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 documents.
“We will create a secure crypto-asset service environment, ensuring that crypto-asset operators who have achieved ISMS certification properly maintain their certification,” the ministry said.
Meanwhile, Koh Seung-beom, the chairman of the FSC, warned investors:
“If you use a [exchange] which has not received ISMS certification, you must be very careful as there is a risk of damage.
This will be little consolation for the millions of customers who do business with platforms that are not among the “big four”. Data compiled by the office of opposition People’s Power Party deputy Kang Min-guk indicated that a total of 2,216,613 account holders have wallets on the 18 largest platforms that are expected to cease KRW trading – with some $ 2 billion in tokens and fiat in their wallets.
Gopax users – all 566,608 of them – now face a nervous wait to see if the exchange can secure its banking deal before the end of business hours, while 438,823 Colombe wallet and 337,981 Huobi Korea account holders will be limited to crypto-to-crypto market activities.
All of this will be relatively positive news for the ‘big four’, who may find themselves the only players left in town over the weekend.
They will also be bolstered by the news that the cumulative value of deposits on the four major exchanges has passed the $ 50.8 billion mark, Chosun reported.
Meanwhile, another international exchange with a relatively large South Korean user base has taken steps to distance itself from the domestic market.
BitMEX wrote on his website that “with the introduction of new local regulatory requirements in South Korea on September 24, 2021,” it would “remove Korean-language documents from its website and trading platform,” well he added that “all other services will remain unaffected.”
Binance and the Singapore-based company Parbit trading platform have both already taken similar steps.
BitMEX concluded by noting:
“We fully support the efforts of regulators to help set standards for cryptocurrency products that will support the advancement of this rapidly growing asset class.”
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