Korean Cryptocurrency exchange companies shutting down due to new laws

Cryptocurrency exchanges in South Korea are closing down, and ceasing operations as the government is set to impose a new anti-money laundering law. It was said that the latest firm to voluntarily shut was Daybit.

Why cryptocurrency firms are making an exit

As per The Korea Herald, Chain Partners, which manages Daybit, revealed its decision to cease its operations by June 1, before the new tougher regulations are implemented. Another local cryptocurrency exchange called CPDAX, which is operated by Coinplug, a blockchain tech developer, has already exited the business earlier this year as it knows the future of the venture is uncertain in S. Korea.

“The operation of Daybit will be halted in phases by June 1 as we are unable to provide normal transaction services amid the toughened regulatory environment after the Act on Reporting and Using Specified Financial Transaction Information went into effect recently,” Daybit’s representative said in a statement.

The company added that before it shut down in June, its contracts with Shinhan Bank will also conclude. More and more crypto exchanges are making the same decision to stop as they are facing many problems when the new law takes effect in a few months. For instance, most of them could not be able to meet the requirements under the new law.

The impending new law on financial transactions in S. Korea

The Act on Reporting and Using Specified Financial Transaction Information has been revised, and it now requires crypto exchanges to have their own information security management systems. It is also directing the crypto firms to establish partnerships with local banks by Sept. 24, and all crypto accounts should be linked with bank accounts under their real name.

Maeil Kyeongje News added that the government revised the regulations to prevent speculative investment. In the country, there are currently just four crypto exchanges that have real-name accounts that are linked with local lenders, and these are Bithumb, Upbit, CoinOne, and Cobit. Meanwhile, with the new law, more are expected to shut down before June.

“There are more than 10 exchanges that completed information security management systems, which is one of the requirements for exchanges that hope to be registered with the Financial Intelligence Unit, but they are having difficulties in getting real-name accounts from local banks,” an insider said. “Out of more than 100 exchanges, we are very likely to see more closures.