South Korean cryptocurrency crackdown wipes $2.6 billion from “Kimchi Coins”

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Cryptocurrency update

South Korean cryptocurrency traders are preparing to withstand losses in excess of Won3tn (US$2.6 billion) as two-thirds of the country’s cryptocurrency exchanges will be eliminated in regulatory reforms in one of the world’s largest digital currency markets.

The Financial Services Commission of South Korea’s Financial Regulatory Until September 24 The registration of foreign and local exchanges as legal trading platforms is part of an effort to strengthen regulation of the country’s booming crypto industry.

But according to industry insiders and regulators, most local exchanges are working hard to meet these conditions, and it is expected that nearly 40 of the 60 cryptocurrency operators in South Korea will be closed.

South Korea’s crypto trading is dominated by the four major exchanges — Upbit, Bithumb, Korbit, and Coinone — which account for more than 90% of the country’s total trading volume.

According to Kim Hyoung-joong, a professor and head of the Cryptocurrency Research Center, the large-scale closure of small exchanges may also eliminate 42 so-called kimchi coins, which are alternative digital currencies listed on local exchanges and mainly traded in Korean won. University.

Industry data shows that digital currencies other than Bitcoin account for approximately 90% of South Korean cryptocurrency transactions, highlighting the highly speculative nature of the market.

“It is expected that there will be a similar bank run near the deadline, because investors cannot cash out their’altcoins’ that are only listed on small exchanges,” said Lee Chul-yi, head of the medium-sized company Foblgate. exchange. “They will suddenly find themselves poor. I want to know if the regulator can deal with these side effects.”

The FSC has recommended that exchanges that cannot meet the regulatory conditions notify their clients of any possible closures by Friday, September 17.

To obtain permission from a legal trading platform, South Korean cryptocurrency exchanges must cooperate with local banks to open real-name bank accounts for customers.However, due to concerns about the impact of money laundering and other risks, the local bank refused to do so Financial crime.

About 20 exchanges have met some regulatory conditions by establishing personal information security systems, and will be allowed to provide encryption to encryption trading services. But industry observers said that given the limited scale of their business, operators will still struggle to survive.

Cho Yeon-haeng, Chairman of the Korea Financial Consumer Federation, said: “Because customer protection is unlikely to be the top priority of exchanges that are facing the imminent closure, trading suspensions and asset freezes on many small exchanges are expected to be huge for investors. loss.”

The regulations will also affect global exchanges that offer Korean won transactions. FSC has issued notices to 27 foreign cryptocurrency exchanges operating for South Korean traders.

BinanceThe world’s largest cryptocurrency exchange suspended the Korean won to cryptocurrency trading service last month to “proactively comply with local regulations”. This is the first such move by a large overseas operator.

Data from Coinhills shows that the South Korean won is the third most widely used currency in bitcoin transactions, second only to the US dollar and the euro, accounting for about 5% of global transaction volume.

Regulators hope reforms can curb Encryption frenzy in Korea.Many young Koreans-they face High unemployment And soaring house prices-despite currency fluctuations, they are still enthusiastic buyers of digital assets.

Bitcoin has experienced a roller coaster this year, soaring above $60,000 in April, and then plummeting to less than $30,000 in June.

Since then, driven by risky bets from developing countries, including developing countries, it has rebounded to about $46,000. El Salvador takes the lead in adopting Digital currency is used as legal tender.

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