Major Korean cryptocurrency exchanges to lose international traders and turn their focus on the domestic audience due to the lack of regulatory uncertainty in South Korea.
A spokesperson of Upbit, the South Korean exchange, expressed his concern about their platform facing issues with providing fiat to crypto trading to its users by saying:
“Providing fiat trading via authenticated banking accounts has been a key issue for us as we were unable to provide the service for over two years.”
It has been reported that Upbit partnered with an internet-only bank K Bank on June 23 to partially solve the challenge, as the official said that their new partnership will allow them to resume fiat trading for South Korean users.
However, users from other countries will most certainly be blocked from using this feature as Korean banking regulations do not permit non-Koreans to open an account with an internet-only bank.
It has been analyzed that with the new partnership replacing an old one with the Industrial Bank of Korea, non-Korean traders on Upbit are now required to withdraw their fiat funds from the exchange before July 24.
The Upbit official said:
“Ensuring full regulatory compliance is obviously very important to us, but the fact that non-citizens can’t trade through K Bank was not a determining factor in the partnership.”
Likewise, other Korean exchanges such as Korbit and Coinone have also integrated an authentication process requiring a domestic mobile phone number, as this automatically cuts out foreign traders from these two exchanges.
As per the report, starting June, non-resident foreign traders on Upbit had been paying 22% of their profits to the exchange when withdrawing their funds. This is to ensure that the platform can easily pay the taxes when the state implements new regulations.
The Upbit spokesperson said:
“A 20% tax has been proposed by legislators, but there hasn’t been an official announcement from South Korea’s Ministry of Economy and Finance. It’s hard to gauge how it will impact exchanges like Upbit until we know the specifics of the new tax guideline.”
Thus, he clarified that if the tax amount levied by the government is lower than what they’re expecting, the exchange will make refunds accordingly.