South Korean Exchanges To Face Greater Regulatory Control?

By Prashant Jha

Four cryptocurrency exchanges from South Korea have reportedly found themselves at the receiving end of greater regulatory probing and stricter rules, while attempting to renew their existing banking accounts. As per reports published by local news media outlets, the exchanges have been facing greater obstacles in getting their renewal done as the FATF (Financial Action Task Force) has recently come out with its updated recommendations on how to regulate digital assets of the crypto variety.

As it appears, the four exchanges who are experiencing this difficulty are Bithumb, Upbit, Coinone and Korbit, as they will now be required to play by much stricter rules than the ones in force earlier. Since the new FATF guidelines were released back in June, they are now liable to follow it in order get their banking renewals done.

The new guidelines that have been issued by the FATF lay down that service providers dealing in crypto-based assets, should ensure full compliance with AML (anti money laundering) regulations. They should also work to make sure that financing of terrorism through their channels can be adequately prevented. Basically, these organisations are now required to play by rules similar to those that apply to traditional financial institutions.

Even though the FATF guidelines have not been accepted to be legally binding, it does have a significant level of influence in determining how the country enforces standards of operations and behaviour for platforms functioning in the space. A noncompliance with the FATF guidelines could potentially also lead the organisation at fault from being left out from the circle of global financial players.

Now, the banks that work with crypto exchanges are legally required to enforce AML standards to ensure greater transparency. Naturally, this is bound to affect the crypto exchanges who are due to get their renewals done soon. An official who works with a significant trading site in Korea, opined:

“In order to meet this standard, small- and medium-sized exchanges that lack the necessary funds are likely to disappear from the market.”

The regulators around the globe are taking more and more interest in solving the problem of regulatory vagueness around the crypto industry and it remains to be seen how crypto industry insiders take it.