South Korean regulators have held an emergency meeting ahead of a crucial day, which could see the vast majority of the nation’s crypto trading platforms shut down ahead of a regulatory deadline on September 24, with many others removing fiat KRW deposits and KRW-crypto trading.
Per Donga and Maeil Kyungjae, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) held an unscheduled summit to see if they could determine which exchanges have already closed, and which are now only offering crypto-to-crypto trading.
In order to do the latter, trading platforms must have obtained information security management system (ISMS) certification.
Thus far, only the “big four” exchanges – Upbit, Korbit, Coinone, and Bithumb – have secured the banking partnerships that will allow them to continue offering KRW-related services. Despite frantic eleventh-hour talks with banks from four others, it appears that all bar one have now conceded that they will not make the deadline after all.
Donga quoted a Gopax official as stating that it was still “negotiating with a financial company to issue a real-name deposit and withdrawal account,” adding that its “KRW market will continue operating as normal” – 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 ISMS certificate holding platforms was actually 43, with three of this number obtaining their documentation in the very nick of time. The media outlet reported that Delio, the Blockchain Company, and Lawdians had obtained their certificates in the past few days and have now reported this fact to the regulators.
The Ministry of Science and ICT, which oversees the certification process, reminded the sector that ISMS certificates are valid for three years, after which companies must apply for new documentation.
“We will create a safe cryptoasset service environment, by ensuring that cryptoasset operators who have obtained ISMS certification properly maintain their certification,” the ministry was quoted as stating.
Meanwhile, Koh Seung-beom, the FSC Chairman, warned investors:
“If you use an [exchange] that has not received ISMS certification, you should be very careful as there is a risk of incurring damage.”
This will come as scant consolation for the millions of customers who do business with non-“big four” platforms. Data compiled by the office of the opposition People’s Power Party MP Kang Min-guk indicated that a total of 2,216,613 account holders have wallets on the 18 largest platforms set to cease trading KRW – with some USD 2bn worth of 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 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 left in town come the weekend.
They will also be bolstered by the news that the cumulative value of deposits on the four major exchanges has passed the USD 50.8bn dollar mark, reported Chosun.
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,” it would be “removing Korean language materials from its website and trading platform,” although it added that “all other services will remain unaffected.”
Binance and the Singapore-based Bybit trading platform have both previously taken similar steps.
BitMEX concluded by noting:
“We fully support the efforts of regulators to help establish standards for cryptocurrency products that will underpin the advancement of this rapidly growing asset class.”