Topic: [2021-04-23]South Korea’s Top Financial Regulator Suggests All Crypto Exchanges (Read 128 times)

Was definitely mistaken then. Up to the time I was following some of the regulatory developments in S Korea, I'd thought most of the big players were quite happy to oblige. Didn't realise it'd actually gone on quite some distance since. I'd just bite down and take the bullet if I were them. If Coinbase and Bitfinex can settle with US regulators, ABN AMRO settling 500M just last week, I'd just tell my Bithumb board: "look guys, let's cough up the settlement and be the only legit exchange in S Korea after this".

Unless they're hiding a laundering scandal more sinister than we'd think, of course.

stompix you talk about FATF but these guys don't even know what the heck FATF is. Let's do some education here
https://www.fatf-gafi.org/
And this about what they are recently working on
https://www.coindesk.com/fatfs-new-guidance

For sure, this body will put their feet into crypto and it's about time we recognize how big their pressure would be. I'm afraid is going to be very big.

It's the FATF guidance, and one for the problems exchange face is this:


Why? They are known for faking their numbers, transparency for all the cashflows would be a pain in the ass for them.
When you have $2 billion volume a day, close to half a trillion a year and you make $30 million out of it something doesn't add up.

 

@buwaytress. It might be because to comply should make those exchanges delist many coins that are considered illegal securities according to the regulators. Those exchanges would also need to begin asking for stricter KYC from users which they might not want to do because users will leave. It might also imply that they should stop accepting users from certain jursdictions.

My question is why on earth are these exchanges finding it so difficult to comply with what seems to be rather reasonable requests from the government?

And I'm a bit too lazy to look it up, but didn't some exchanges already begin submitting applications late last year? Or is this entirely new requirements?

Seems pretty suspect in the first place if even Bithumb and co can't meet what financial institutions usually should!

This loser (Eun Sung-soo) is actually threatening to close down the cryptocurrency exchanges, if they don't apply for the new licensing system - Virtual Asset Service Provider (VASP) permit. The registration was open only a few weeks back and therefore it will be foolish to say that the exchanges are not trying to get the permit. BTW, given the strict requirements, I don't think more than one or two dozen exchanges will opt for the registration. The remainder will simply move their operations to some other country.

The government does not care for the people. The government is worried because the cryptospace is giving the people the power to move value everywhere without their control. Also, the cryptospace takes the power of money issuance away from the government.

It's funny that when it comes to speculation on classical stock exchanges with ordinary issuers familiar to all, this does not particularly bother anyone and is perceived as a given and commonplace. And as soon as something like this is connected with a cryptocurrency that they cannot control and can simply prohibit something, for example, exchange trading that is officially registered and pays taxes ... like an elephant in a china shop. it's so sad..

Even their own government is worried about how many of their citizens are into the crypto industry not because of the AML issue but because of its speculative in nature which I think for something that affects the economy will really make any government to worry about. With their department head speaking like that on how their crypto exchanges will be shutdown it is obviously a threat or a wake up call for crypto exchanges to fill in the requirements which is tying up with a commercial bank as only the big 4 crypto exchanges in South Korea have complied so far. There is really no issue at all but they are just waiting for this exchanges to comply with the new regulations they have.

South Korea’s Top Financial Regulator Suggests All Crypto Exchanges Could Be Shut Down

The head of South Korea’s financial regulatory agency has created controversy by saying all the country’s cryptocurrency exchanges could be shut down in September.

During a meeting of the National Assembly’s policy committee on April 22, Eun Sung-soo, chair of the Financial Services Commission (FSC), said the agency has yet to receive any any Virtual Asset Service Provider (VASP) applications required under a recently amended law going into effect later this year.

“There are an estimated 200 cryptocurrency exchanges in the country,” he added. “But if the current situation continues then all of them could be shut down.” 

Eun was referring to South Korea’s anti-money laundering (AML) law, the Financial Transactions Reporting Act (FTRA), which was amended last year to apply to crypto exchanges. The legislation requires VASPs to register with financial authorities.

The FSC began accepting applications for registration on March 25, but no exchanges have applied yet. Exchanges have until Sept. 24 to have their registration approved by the FSC. The FSC will only approve exchanges that can sufficiently demonstrate the robustness of their AML systems.

On April 19, the government’s policy office issued a statement that authorities will implement a “special enforcement period” from April to September to shut down any “illegitimate crypto businesses” and ensure that exchanges are abiding by the FTRA.   

The most important qualification for VASP registration is an official partnership with a local commercial bank. Out of the some 200 exchanges to which Eun alluded, only the country’s four largest exchanges, known as the “Big 4,” have established such partnerships thus far. Many industry insiders already think the Big 4 will end up being the only exchanges to survive the regulatory tidal wave, but Eun’s comments have stirred up new worries.

Eun’s remarks come at a time when interest in crypto among Koreans is booming. The Big 4 registered 2.49 million new users during the first quarter of 2021, 64% of them in their 20s and 30s. Traders in their 30s devoted over $398 million on crypto trading, outspending every other demographic. Shutting down the Big 4 would deal a severe blow to these young investors.   

When asked about normalizing crypto trading, Eun’s response was, “The worry is that officializing the cryptocurrency industry and bringing it in under regulatory approval will only encourage speculation.”

Regarding legal protections for crypto traders against scams, Eun said that “it’s difficult for the state to protect crypto traders,” claiming that crypto trading is inherently more speculative than stock trading. He compared crypto transactions to fine art deals, explaining the state doesn’t take responsibility for consumers being scammed by art counterfeiters. “It’s the personal responsibility of the buyer to protect himself from [crypto] scams,” he said.   

This isn’t the first time South Korea’s traders have faced government-induced agita. In January 2018, the country’s justice minister announced during a press conference his ministry was “preparing legislation that effectively prohibits cryptocurrency trading” and that the ministry’s goal was to “shut down all exchanges.” Park went on to equate crypto trading with “gambling.”

The global price of bitcoin (BTC, -2.12%) plummeted 8% on the day of Park’s comments. Due to the so-called kimchi premium, the local price plunged as much as 15%. South Koreans refer to this day as the “Park Sang-ki disaster.” 

On the day of Eun’s comments, the kimchi premium stood at around 13% but fell to as low as 2% the next day. This drop was coupled with a steep decline in bitcoin’s global price.

https://www.coindesk.com/south-koreas-top-financial-regulator-suggests-all-crypto-exchanges-could-be-shut-down