A new regulatory overhaul could put 40 out of 60 exchanges out of business in South Korea after the firms are expected to fail to meet the conditions that are being proposed by the Financial Services Commission (FSC). The regulatory overhaul might also affect holders of locally used “kimchi” coins, which won’t trade them for fiat in other exchanges. This could bring losses of more than $2.6 billion.
40 crypto exchanges are expected to shut down in South Korea.
According to a FT report, it is expected that 40 of the 60 exchanges that operate in the country will be closed due to the inability to comply with the new regulatory framework issued by the Financial Services Commission. This rule, which has a deadline for next September 24, establishes that all exchanges need to register with the institution to operate in the country. However, many of these exchanges have no way of complying with the requisites to do so. The law also states that every crypto exchange must partner with a baking institution to open real-name bank accounts for customers.
The regulatory overhaul will also affect local investors.
This regulatory overhaul in South Korea will also have unintended consequences for local investors. The closure of the little exchanges unable to comply with these rules can bring $2.6 billion in losses to Korean investors. This is because these exchanges list the so-called “kimchi coins,” a group of 42 small alternative cryptocurrencies that are used only by local investors. If these exchanges do close, liquidity for exchanging these coins will disappear. International crypto exchanges are also affected by the measure and need to register with the FSC.