Topic: New regulation in South Korea has forced several exchanges to close (Read 413 times)

Exchange platforms and local wallets will be the number one target of the government in case they want to put a tax on cryptocurrency because it's their one and only choice. Luckily, at this moment, our country doesn't have any taxes on crypto and even in local wallets but I'm sure that they're working on it right now. But still, cryptocurrency is allowed in the country, let's say that it's still a good news rather than implementing a crypto ban in the whole country that puts their investments in danger.

Bad news, but they are still allowing their citizens to trade cryptocurrencies albeit with various restrictions unlike countries like China who are outright banning them instead of trying to regulate them in different ways.

This news will only affect domestic traders in South Korea primarily in my opinion. Exchanges should be prepared for these scenarios in order to survive in this competitive market.

Of course it will always in favor with the government so if such exchanges are operated illegally, then they will be force to close their sites. For me, it might be a big hassle for thousands of traders residing in South Korea but i know it will be for their own security. And we can assure that after this operation, what's left are those legit and reliable exchanges. If these operators don't have negative motives, then they can easily comply with the requirements.

Since it was first introduced in 2009, bitcoin has continued to grow into a digital asset. Bitcoin which was initially widely opposed, now many countries are starting to open up opportunities for cryptocurrencies to grow. Of course, by starting to finalize various regulations to ensure the safety of the parties involved.
 
The attitude of each country in responding to the presence of cryptocurrencies is still diverse. Switzerland in February, openly accepted crypto as a means of payment. However, there are also countries that are still working on the rules for the development of the crypto industry.

South Korean regulator Financial Services Commission (FSC) chairman Eun Sung-soo has warned that all cryptocurrency exchanges in the country could be shut down. He said South Korea currently has around 200 cryptocurrency exchange platforms.

Eun explained that cryptocurrency exchanges must be registered with the FSC, under the revised Special Funds Act.

un asserted, cryptocurrency is not a currency. The South Korean government, he continued, has repeatedly warned investors that the price volatility that often occurs in the crypto world can be dangerous for investors.

However, on the other hand, Eun revealed, investors can also benefit from investing in cryptocurrencies. The plan is that the government will also impose a 20 percent tax from February next year.

Meanwhile, India does not close all options in terms of cryptocurrencies, including the use of blockchain technology. This was conveyed by Indian Finance Minister Nirmala Sitharaman last month.

Shitaraman said people would be given adequate places to experiment with blockchain, bitcoin and other cryptocurrencies. According to him, the Government of India is currently preparing the cabinet notes.

The plan is that the Government of India will allow a number of places for people to experiment on blockchain and bitcoin. However, Shitaraman revealed, what kind of formulation for the development of cryptocurrencies is still in the brewing stage.


https://www.republika.co.id/berita/qspwy1368/tarik-ulur-regulasi-kripto-di-berbagai-negara



So, I don't think this is the end of cryptocurrencies.

regulations made in a number of different countries.

What is the point in having close to a hundred cryptocurrency exchanges in a small country like South Korea? Small-sized exchanges are more vulnerable to hacking and at least some of them may be operated by shady characters. The regulations are a bit strict, but the government had given enough time to the exchanges. With some effort, it was possible even for the smaller exchanges to complete them ahead of the deadline. If they were not serious about it, then it is their problem. No point in blaming the government here.

With the amount of exchange fraud happening in South Korea by the unscrupulous exchange operators and the massive increase in reports of fraud by retail traders, I'd say the regulations are overall a good thing.  It will increase confidence in crypto and cut down on bad actors.  In the short term, it will restrict competition as the largest exchanges can afford to comply with the regulations quickly.  It's a shame there hasn't seemed to be enough forewarning to allow more exchanges to comply by the deadline.  They could have handled that aspect better.

This seems astonishingly backwards and counter productive for South Korea. This is not only going to send the exchanges away to nearby countries with lower regulations but I doubt anyone will ever fully trust South Korea with anything crypto- related in the future. Oh well, I say they are going to pull an India and take it all back when they realise how big crypto- and especially Bitcoin will become.

I think that the latest price movements are related to this new regulation. While China has made similar moves in the past, SK is much more influential as there is a huge amount of trade, particularly if you look at the size of the country and the population. Part of it has to do with the fact that many you Koreans just cannot have access to a home of their own unless they belong to the top 20% of students or wealthy families.

Yes, talking about Korea has created many problems for cryptocurrencies like bitcoin in the past, but I think they will end that soon. I wonder if this affects Koreans using foreign exchanges. outside or not, ... if not, I guess instead of shutting down the exchange should look for a license to operate in other countries. And it's getting harder and harder to stay in business while it's up and running. Things will become restrictive and the law will intervene.

Wow, first this, and today the central bank of China announcing that crypto operations are illegal. Things aren't looking good in two countries where cryptos are quite popular. Tough regulations are better than outright bans, but they can still have a major negative impact. As for $2135 of profit, the crucial data I can't see is per which period? Per month, per quarter of the year, or per year? These are all very different limits, and honestly, if it's per month, it might not be that tough, especially if it's zero below this sum. But I'm more into progressive taxes. After such bad news, I think Bitcoin is doing fairly well. I hope we won't see a significantly more serious deep, though.

And as well as impose a hard punishment for those that won't comply to the mandatory regulation of South Korea. It's their way to control and regulate since there's massive money and profits that they can take from forcing exchanges to follow them.
But they have to weigh things and if most of these exchanges won't comply and will just start their new office offshore, it's going to be a big loss on their country.

Crypto has been eyed for so many years now by the government not only in South Korea but almost every country in the world.

The government is trying so hard to get a grip on the cryptocurrency community. The legal status of crypto in one's country has its consequences. It's a matter of giving and take situation wherein the citizens can benefit from the opportunities offered by crypto, and at the same time, the government will benefit from it too by means of imposing certain rules and policies to be abided by the citizens such as paying proper taxes.

By doing this, the essence of crypto being decentralized is slowly being neglected. Although it's still up to the people to whether use platforms such as exchangers that use KYC or not. Privacy isn't much more of the people's concern nowadays anyway. But yeah, this isn't a piece of nice news given that a huge percentage of tax will be mandatory to be paid by the investors and traders that are earning income thru crypto.

Probably a barrier in understanding them since we've got used to our European way of doing things and we appreciate them only for the things that are missing here, all the way ignoring the problems they have that we don't experience. I've never been to China or SK, but I've been to Japan and to be honest, it was quite a disappointment from what I've expected, it's a far stricter country than what the net says, by far more rules on anything, and many more things some that will make a foreigner feel really uncomfortable.
This need for rules, their way of making rules to prevent something from happening in the first time, unlike us Europeans who make rules to prevent something from happening again the third time is maybe dictating their policies. I have seen this with the covid response, while people in Europe are fighting over the requirements to wear a mask I've never seen such news there, nor against the rules, it's probably their mentality, a society that is built only on rules and need rules for everything.

To get a better picture of this we would need probably to gauge the response from people in those countries, what they think of those regulations, how many are against, how many are for them, but there is a complete lack of information, we can't even get a list of those damn exchanges.

So with the banning that happens in South Korea, people will search for decentralized exchange and leave the centralized exchange so they do not have to worry if the government closes the exchanges anytime. They can still trade and make money while they can convert their profit into their currency. The government can do anything to make sure their people follow their rules and if necessary, they will force their people to KYC with full requirements.

If not total control what else could it be! This is the only sure way they can dip their claws in the crypto space, almost everyone has a bank account or will do one thing or the other with bank, forcing exchange to partner with banks is the smartest way to get control over the crypto activities in that country.

That's good to know, because all those billions of billions that will be lost in case 40 of the supposedly 60 crypto exchanges that operate in that country are closed seem to have served very well to create a FUD, along with the Evergrande scandal in China. It may just seem that way to me, but it seems that this part of the world constantly has some problems when it comes to cryptocurrencies (I mean Japan as well), because they have been regulating this market for at least 4-5 years, and as if they are constantly spinning in an enchanted circle.

I would expect that from corrupt politics, inefficient bureaucracy, but not from countries like South Korea or Japan - I do not hear that there are such problems in Germany or Switzerland.

Are you confusing South Korea with North Korea? The OP referred to the South, as the new law is applicable there. No cryptocurrency exchange operates in the North. However, North Korean hackers have been accused of hacking many of the cryptocurrency exchanges which are based in South Korea and Japan in recent times. And it is impossible to take any legal action against them. North Korea is already under all sorts of sanctions and embargoes. It is not possible to impose any new restriction or penalty upon them.

Centralized exchanges are potential points of failure, which is why bitcoin is decentralized, it is inevitable that something like this keeps happening all over the world as governments either want a piece of the action and want heavy regulations so they can get taxes out of all of this or they want to reduce the speed at which bitcoin is expanding, and they plan to use this type of regulations to try to regulate bitcoin to death.

It seems to be really very small exchanges that will not continue. Otherwise, many users would have already received an email and would certainly have told us about it here in the forum.

https://www.reuters.com/technology/over-60-skorean-crypto-exchanges-set-suspend-services-next-week-2021-09-17/

I also think that we should no longer worry too much about the market being affected by this. There are only two days left and most people should have cashed out already. (Although some exchanges will certainly continue illegally  ).

I've searched a lot for that list too but seems like everyone is just pushing numbers without naming those exchanges.

Anyhow, if this helps, 4 of those granted the license are : Upbit, Bithumb, Coinone, Korbi.
There are 28 others who have been granted security certificates that will allow them to keep running but without having a won pair and accepting deposits, again no complete list as I haven't managed to find one:

Anyhow, the newspapers I've read mentioned that the big four make 90% of the volume, so the hit will not be that hard, 10% volume lost which might actually migrate to those is not a matter of concern.

I guess they could use the peer-to-peer exchanges/wallets to make to conversions. There are several of them but I hope they can use the decentralized ones more.
They could have their funds in Bitcoin or in one of the main stablecoins then gradually convert their them to national currency when they need to spend them.

Does anyone have a list of the Exchanges that are located in South Korea?

20% is a very high percentage. With that figure, I think the Korean government should provide proper facilities and guarantees to those investors. I see the level of crypto crime cases in Korea is quite high.

This will be a rights war between 2 business entities, on the one hand the Korean government pressures the exchanges to get the customer's original identity rights through their bank partners, while the banking institutions ask to release the bank's responsibility for crypto crime cases.
https://news.bitcoin.com/korean-banks-to-be-relieved-of-liability-for-crypto-related-crime-report-suggests/

New York had something like this back in the day. There were a lot of companies who were interested in moving to New York because financial world is there, wall street is one of the biggest financial hearts of the world, what they do there in wall street could impact the economies of whole nations. So crypto companies wanted to be there, Coinbase would have a huge headquarters right in the middle of wall street if the laws were not like that.

However, one day there was an idiot called Benjamin Lawsky who wanted to create something called Bitlicense to make sure regulations on crypto was harsher, and when he stopped working for his job, he became a consultant for companies who wanted to get bitlicense, so basically, he created his own retirement plan based on crypto in New York. Now many companies run away from New York, even if founded there, they go to delaware which has a lot more lax laws.

It’s gonna be difficult if we live in South Korea right now as crypto enthusiasts. 20% tariff is very painful in our pockets when the crypto capital gains tax is going to be in effect. But for P2P trading, I think this is the safe haven but there are limits on how many buyers and sellers are there in South Korean who are doing P2P. There’s no doubt that US will be imposing stricter measures for the crypto industry as well. In the Philippines, I think they classify crypto as luxury tax (correct me if I’m wrong though).

Because it's easier for the law to trace those payments if they want to, all the cashflow will be done through 1-2 banks and not spread across the entire system with exchanges making payments out of 100 accounts to 100 banks, probably a lot of times even for the same exchange user to different bank accounts.
Putting another player in this mess would simply give them more headaches and they don't want any whatsoever.


Nope, it's not normal and their FSA should track the source of all this at an individual level, but you see that nobody is that keen on doing that much work. Exchanges want to minimize their responsibilities by only checking names on an id and on bank statements, banks don't want to be just the gateway for people who are not their regular clients with credit cards/loans all that stuff,  and the state is lazy as usual.



If they will deal with South Koreans wons, and they accept it as a currency or use it as a pair they will be forced to seek a license.
But, the opposite is happening: Bithumb to ban foreigners without mobile phone identification

Hopefully, that will not impact bitcoin price globally or if that impacts the price, it will not have a big impact. But maybe this situation is related to that news since the bitcoin price now is down a lot. I wonder what those people will do if many exchanges have been forced to close their businesses. But I think those people will trying to search for the other exchanges and use that exchanges to continue trading. But I think those exchanges will not want to close their exchange and will try to fill the requirement from the government to run their business.

While banks were in the law for handling the money, now they're there to prove ownership of accounts / enforce KYC.
In my brain these are different things. It's only the banks who can do such checks? I guess not. And if so, why are the partnership enforced with banks and not any kind of company that can do such tasks? And what if the business can create its own department for handling this? Sorry, I may be missing something, but for me this enforced partnership is not normal.


Indeed. And it's becoming harder to harder to keep the business running while it's on the run. After the Binance experience it's to be expected that the countries will only get better in avoiding/banning this kind of practices.

I wonder if this affects S. Koreans who use foreign exchanges,... if not, I guess rather than closing down, the exchangea should seek for licenses to operate in other countries, then the people from the country could continue with them..
I couldn't access the article in order to properly understand the issues/demands.

The lawyers will not do be able to do a thing, it's just like here in the EU, every business must have a  bank account for operations, same will be applied here, with the small difference that they will not permit any more deposits and withdrawals from other accounts with a punishment this time, not just tax evasion (if proven).
It was common practice for exchanges to operate with personal accounts in order to hide cashflows and avoid taxation, now they if they try this is going to hurt them a lot.

That's below the average monthly wage for Korea,  I think this might fit the first tax bracket for them, I'm not familiar with their tax system but this might be the minimum value for zero tax earnings.
So no, it's not by any means aimed at taxing the "rich", it will end up taxing almost everyone who makes a profit.


then Japan, then Malta, and so on and on, and even he had no choice but to actually remove all the Korean won pair and even the Korean language from Binance.

That's exactly the reason for that, the banks have political friends and they want to protect their interest as much as they can even if they have to pay or bribe these politician friends. It's not yet the end for the crypto scene in South Korea though, they will still find ways to make things in their favor despite being against the odds with the government itself.

To be candid, I do not know much about how capital gain tax is calculated accurately which could also be differ from country to country. Only what I read about it few months ago is that it is deducted from the profit made either while converting crypto asset to another crypto asset or the profit made while converting crypto asset to fiat. That was the reason I implied the rich people would be the ones that will likely be in the category and also people that are lucky during volatile price trends that favour holding or the position opened. If it is calculated annually, even the average people will also most fall in the category of people that will be taxed, but if calculated on position opened in each trade, maybe the rich will fall more into the category. I may not be absolutely correct.

Yes, they are exchanges based in South Korea, but maybe they can just follow what CZ did to Binance, CZ got not option again than to leave China, but those exchanges are very small exchanges in trading volume, the first four exchanges have over 90% or even over 95% of the total trading volume, so this could be hard for small exchanges to follow.

According to what I read from the news, the banks are not ready to partner with small exchanges, if the banks did not partner with them, likely they will close up as you commented.

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All I can see now is how cryptocurrencies are getting more centralized while it is normally not centralized in design, but if not using exchanges for trading, holders can hold on noncustododial wallets.

A lot of things happening in crypto just today from the fud Binance server to scary South Korea crypto regulation. Crypto Capital gain tax is not going to attract more investors in crypto, this is a crackdown on investors and crypto businesses as well that is why they are making sure the names in cryptocurrency exchanges match the bank accounts.

Anything that is related to finance and trading is strongly regulated and these regulations vary a lot between countries. Believe or not, insider trading is allowed in Russia for example, but, in theory, the SEC throws people in jail for it.



You are not missing anything I think, there are just 4 exchanges of the possible tens existing. You do not have to be rich to make 2k in profits. Most traders make that in profit, before losing it after of course

I read and reread this article and I confess that I cannot understand why the Korean regulator requires exchanges to have partnerships with banks and at the same time empowers banks to reject or not partner with exchanges, we all know that the owners of banks are people from the political parties that most of the time govern the country and if the government is not liking cryptocurrencies, the banks will also not like cryptocurrencies because the banks follow what the government says or opines. i think this south korean behavior is typical behavior of someone who doesn't want cryptocurrencies in their country

It looks like the wind is blowing against cryptocurrency. The regulators in countries around the world are finally realizing that massive amounts of money is being made and moved among these exchanges. For any real long term buyer, it should actually be a good thing because you'll be able to build up your holdings as the price comes down. We saw a few months ago a flash crash happened when there was just a rumor of the US banking regulator taking action and Europe is likely to be even more strict. Considering Bitcoin has only been around and popular for less than 10 years, there is still many more laws to be written around it and politicians are always looking for easy fund raising targets - what better than a currency bought by younger generations who are less likely to vote anyway.

The tax rate is almost the same for stock trades.


Source : Here

I think that this is one of the way for the South Korea Government to discourage crypto trading in their country considering that there is 11 bilion usd worth of transaction in upbit alone so yeah they will try to milk as much as they can from traders. Expected move from goverments though, if they cant do anything to crypto then applying hefty tax rates should do the job

The above is an excerpt from the link in the op, and it's basically clear that Governments will continue to impose regulations, sanctions and bans under the pretext of attempting to challenge and quell crypto scams, when actually they are trying their possible best to have some sort of control over the network and limit its growth which is proving futile, the thing is, I expect this regulations to continue and it's very comfortable for the government to have some sort of control over crypto through centralized exchanges, as the exchange holds possession of users info/data.

Imo, this could be a calculated move to make life difficult for crypto exchanges, and by extension its users, to prolly kick some of them out of business or without choice force them to bend to their new rules, I mean, it's not like fiat crimes and scams have been replaced with crypto scams but the government is making it feel that way; I really do not have high hopes that governments in time to come will be receptive to dex crypto, it's clear they are obsessed with control and want to smother any form of freedom of funds their citizens can get.

Is this thread appropriate in the altcoin discussion section?
I hope the current price decline is not affected by the South Korean policy. Maybe they've always made pretty authoritarian rules. But previously the South Korean government had funded their military from the proceeds of Crypto theft which was funded by the government there. They just take the opportunity in adversity.

$2135 isn't really that much money for a lot of crypto traders, especially over the course of a year (which is what I assume the language of the regulation means).  So that tariff doesn't target only wealthy crypto investors/traders at all--and I think it's ridiculous, even though 20% is probably lower than capital gains taxes on stock trades (though I don't know that for sure).  Governments are constantly trying to figure out how many pockets you have so that they can stick their octopus hands in all of them.

Is SouthXchange based in S. Korea?  I'm pretty sure it is, and I wonder if they're going to comply with these regs or if they're going to close up shop.

The newly imposed strict reporting requirements, seem identical to the ones many americans have grown sick of.

A trend which could be related to americans renouncing citizenship in record numbers, immigrating to countries with low income taxes and none of the strict reporting requirements of countries like the USA and now south korea.


The Biden administration (and their allies) failed to pass "minimum tax requirements" for the entire world earlier in 2021.

It looks as if they're still trying to expand their tax hike and strict reporting policies across the entire world on a nation by nation basis.

South Korean government did create problems for cryptocurrencies like bitcoins in the past as well, but I thought they will be over with that soon, at the same time introducing such taxes not only sends a strong greedy message to the users but also it's not right to increase it so suddenly, there are countries where the taxes are 20% for sure but I do think that since bitcoins and cryptocurrencies are not really something born out of the governmental bodies they should not be something they should earn from but then again some of them do provide the people with protection against frauds and also legalize the cryptos as well, so maybe it might be good to introduce some reasonable tax not sure if it would be a good idea to push the market away suddenly since for the long term they would be making more money if more people would be engaged in it. Maybe they also wanna introduce their own, digital currency as well.

I was surprised to read SK Won is the third traded fiat-to-crypto with the highest trading volume while the US Dollar and the Pounds are the first and second respectively.



Also, I was surprised to see upbit having 80-90% or more of the SK crypto trading volume, while the first 4 exchanges have more than 90-95% or more of the country's crypto trading volume.

Never mind me, I have read the news, but four exchanges were included to have complied, or is there anything I am still missing?

Which means it will be imposed on the rich people in the country or anyone that has such huge profit. We hope capital loss will also still be deducted first as the net result before the capital gain is calculated.

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Woah, I'm sure that if this is for real, it can be easily attacked by some smart lawyers.
I mean, if I have a successful business I have to partner with another private business only for the sake of it? This must be incorrect. Why would I help another private business? It's my business, I have to find the ways for enforcing KYC - maybe with the help from another company, or maybe not. It should be my decision...

Crypto exchange will always be the target of the government not only in South Korea but there will definitely be other countries that will regulate it, the circulation of money in it may be main target, this is the example They must also partner with banks to ensure real-name accounts.

https://fortune.com/2021/09/17/south-korea-crypto-exchange-shut-down-bitcoin-regulation/

The regulation coming into place this week places unbearable compliance demands on crypto exchanges up to the point of only three of these being able to fully comply. SK is one of the countries where people have participated in crypto to a much higher degree than in most and this is not good news. Still, some of the exchanges remain open.