A number of smaller South Korean crypto exchanges have announced their imminent closure – throwing in the towel in their struggle to meet a fast-approaching regulatory deadline that is threatening to derail the nation’s crypto trading platform industry.
Per Joongang Ilbo, the latest exchanges to announce they will be closing their doors in the coming weeks are Darlbit, CPAX and Daybit.
CPAX’s imminent closure, in particular, will raise eyebrows, as the platform has served as the exchange arm of the major blockchain player Coinplug. The latter is a key government partner on a range of contact-free tech solutions.
CPAX confirmed the news on its website, writing that a coming “suspension of the withdrawal services” on September 1 was “not a temporary suspension,” but was being carried out “in accordance with the termination of our exchange services.
Darlbit and Daybit both made reference to “the government’s enforcement” of the new measures and “regulatory changes” in their own announcements.
Another exchange, Bitsonic, stopped short of announcing it would close, but admitted on its Telegram channel that it was suspending its services for an initial three months. However, it wrote that it would be “difficult to resume normal operations” after its suspension due to “unavoidable” issues both “inside and outside the company.”
By the 24th of next month, all crypto exchanges in the country must obtain information security management system (ISMS) certification, form partnerships with real name-authenticated commercial banking partners, adopt anti-money laundering protocols, and prove their management credentials to financial regulators – along with a range of other compliance measures.
Failure to comply might result in fines and even imprisonment.
The provisions have already led a number of platforms to close, with many fully aware that they do not have the financial resources required to meet the requirements. Some critics of the regulations, including leading politicians, have warned of a looming “shutdown crisis.”
Most expect at least the “big four” exchanges – Korbit, Bithumb, Upbit, and Coinone – to gain approval, although it seems that none of this group has yet secured the key banking contracts they will need in order to keep doing business after September 24.
With overseas exchange trading also facing a decidedly rocky future, the picture is currently bleak for crypto traders in South Korea – a nation where crypto investment and trading volumes soared this year.
Smaller exchanges have also been shaken by an audit of banking procedures that last week uncovered at least 14 “fake” accounts being used by small trading platforms. All 14 cases have been handed over to the police and prosecution services.