All crypto exchanges in South Korea to be shut down?

South Korea Crypto Regulations

Oh dear! The head of South Korea’s financial regulatory agency has created controversy by saying that all crypto exchanges in the country could be shut down in September.

That is, if they do not apply for registration under the Virtual Asset Service Provider (VASP) law.

This new law is going into effect later this year after being amended last year, and it applies to crypto exchanges. Regulators in the country are clamping down on crypto exchanges recently with this new legislation requiring VASPs to register with financial authorities.

During a meeting at the policy committee of the National Assembly on April 22, Eun Sung-soo, chair of the Financial Services Commission (FSC) revealed that the agency is yet to receive any VASP applications.

He added:

“There are an estimated 200 cryptocurrency exchanges in the country. But if the current situation continues then all of them could be shut down.”

The FSC began accepting applications for registration on March 25, but no exchanges have applied yet. Exchanges have until September 24 to have their registration approved by the regulator. It will only approve exchanges that can sufficiently demonstrate the robustness of their AML systems.

What’s interesting is that the most important qualification of VASP registration is an official partnership with a local commercial bank.

And out of some 200 exchanges in the country, only the four largest exchanges in South Korea have established such partnerships thus far. These exchanges are known as the “Big 4”, and many industry insiders are of the view that only these will end up surviving this regulatory tidal wave.

Eun’s comments have stirred up new worries, as his remarks come at a time when interest in crypto among Koreans is booming.

Then again, officializing the cryptocurrency industry in the country and bringing it under regulatory approval is the need of the hour, what with the rising number of scams in South Korea.

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