After failing to meet the new crypto regulations, authorities in South Korea shuts 60 crypto exchanges and order to either temporary or permanently cease all operations. In addition to this, the operators must inform all customers about the closure maximum until Friday.
This comes after the Financial Services Commission of South Korea, the country’s non-bank financial regulator, passed the new anti-money laundering guideline in January 2021.
These regulations obligate crypto exchanges to obtain a license, in addition to registering with the Financial Services Commission. Moreover, the operators must also satisfy the criteria of the regulator in order to obtain the license.
Meaning that the exchanges will have to prove that there is no money laundering activity whatsoever. For that purpose, each operator must follow the stern KYC rules and guidelines and provide proof.
The Financial Services Commission set the first deadline for March 2021. However, after the majority of operators failed to meet the criteria, the FSC pushed the deadline until the 24th of September. The FSC also obligates exchanges to inform about the cease of operations, minimum seven days before the closure.
Consequently, with the new deadline in place, crypto exchanges are in a race with time to complete the tasks. First, they will have to register with Financial Intelligence Unit, South Korea’s anti-money laundering authority.
Afterwards, they need to partner up with a real bank, in order to provide a legal bank account. And that is pretty much.
Considering that the ‘grey’ area is exactly what motivates small to mid-size exchanges, many of them are forced to close down permanently. Simply because they cannot compete with the big dogs when it comes to financial might.
In fact, only a few crypto exchanges managed to fully comply with all new regulations from the anti-money laundering guidelines.
What we know for now is that South Korea shuts-down 60 crypto exchanges. And that they have exactly one week to meet the requirements. We can only wait and see what will the turnout be. And will the Financial Services Commission re-schedule the deadline for a third time?
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