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South Korea Government Pivots Away from Cryptocurrency

The regulators of South Korea have grown increasingly hostile towards digital currencies while continuing to support blockchain development. As a result, many local crypto exchanges face closure.

However, local politicians and regulators have started lobbying for a new set of regulations that are expected to provide clarity for stakeholders in the crypto market.

Although crypto exchanges in South Korea are allowed to trade Bitcoin (BTC) and other digital currencies, the number of trading platforms has continued to decrease. Most recently, Prixbit shut down in early August “due to negative internal and external influences”, according to a statement by the exchange’s owner. 

Apart from the country’s largest players Upbit, Coinone, Bithumb, and Korbit, widely known as ‘the Big Four’ of the South Korean crypto market. Many small and medium-sized exchanges are unable to open real-name virtual accounts for their users due to a lack of support from Korean banks.

Big Four Benefits from Unfair Competition

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South Korea’s government launched a real-name trading system for cryptocurrency activities as part of its anti-money laundering (AML) measures in January 2018.

However, only the Big Four exchanges have been successful in establishing the necessary relations with local banks so far. New regulations have gone even further, requiring crypto exchanges to share users’ transaction data with banks and traders to use bank accounts opened under their real name to link with their trading account.

Park Jong-Baek, a partner at South Korean law firm BKL, said:

“Out of about six banks which set up such an account system, only three decided to provide such account service to only big four exchanges.” Park Jong-Baek

Source: Asia Blockchain Review



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