A customer looks at a digital price board of crpytocurrencies at a virtual asset exchange on Sept. 7. (Yonhap)
Time ran out Friday for cryptocurrency exchanges to announce the closure of their services if they would not be operable after Sept. 24, marking a critical time that will decide the fate of many cryptocurrency exchanges in the country.
More than 30 cryptocurrency exchanges were expected to give notice for a service shutdown by the end of Friday, as 24 exchanges have not applied for the Information Security Management System and 10 failed to acquire a certificate, according to industry sources.
As of Friday, only 28 out of 66 identified exchanges in South Korea have the appropriate system designated by authorities designed to proactively limit any security breaches.
The Financial Services Commission last month recommended cryptocurrency exchanges expecting business suspension to make an announcement at least one week prior to their shutdown, and offer detailed information such as the schedule and refund methods. And a string of closures is expected after Sept. 24 when the six-month grace period of the Act on Reporting and Using Specified Financial Transaction Information expires. The anti-money laundering act requires crypto exchanges to be equipped with ISMS and to form partnerships with local banks by Sept. 24.
Out of the 28 exchanges with ISMS, only four exchanges -- Upbit, Bithumb, Coinone and Korbit -- have registered with the Financial Intelligence Unit, the anti-money laundering body, with both ISMS and a real-name bank account system in place. The remaining exchanges are still struggling to secure real-name bank accounts as most lenders are reluctant to forge partnerships with smaller virtual asset operators.
If an exchange only has an ISMS, but not a real-name bank account system, it can continue trading among cryptocurrencies as long as it’s not the Korean won settlement.
The four major cryptocurrency exchanges, once they are given a green light for their registration, can fully operate, including trading between fiat money and cryptocurrencies.
By Park Ga-young (firstname.lastname@example.org)