The ball is finally starting to roll in South Korea, where new rules requiring crypto exchanges to provide real-named authenticated banking services will come into force next week – potentially derailing scores of trading platforms.
As previously reported, crypto exchanges must obtain information security management system (ISMS) certification if they are to continue offering crypto-to-crypto trading. But if they want to offer fiat KRW pairings, they must obtain banking deals before September 24.
Some exchanges already appear to be ready to concede that this is an impossibility, particularly with a potentially problematic three-day national holiday beginning on Monday next week. This number includes Foblegate and Coinbit, ISMS-certified exchanges that are in the nation’s top 10 in terms of size and trading figures. Per CoinMarketCap data, Foblegate’s 24-hour trading volume stands at almost USD 63m, with Coinbit posting similar figures. They are (respectively) the 89th and 74th biggest platforms in the world per trading volume.
KBS reported that the Foblegate exchange said it would “temporarily suspend” KRW trading, although it will still allow KRW withdrawals until the end of the month. The firm claimed that it would keep its crypto-to-crypto services open, and open a new altcoin-to-bitcoin (BTC) market while it looked for a solution to the banking conundrum.
Coinbit has also announced that it will stop offering KRW pairings.
Also joining their number are a clutch of smaller exchanges, named by KBS as Tennten, Coredax (just outside CoinMarketCap’s top 200) and OKBit.
Many leading banks have already ruled out the idea of working with exchanges, but some platforms insist that they are still conducting “talks” with banks. These include the likes of Gopax, Huobi Korea (#28 in the CoinMarketCap 100), and GDAC, who The Fact reported are still “holding conversations” with commercial banks.
An industry professional familiar with the matter told Cryptonews.com under the condition of anonymity that other platforms such as Hanbitco (#62 in the CoinMarketCap 100) were also believed to be speaking to domestic banks.
Time, though, is running out.
The same industry professional told Cryptonews.com that banks are still showing great reluctance about the idea of partnering with a non-“big four” trading platform. All four members of the “big four” (Upbit, Bithumb, Korbit, and Coinone) have renewed their existing banking contracts and are now awaiting the green light from regulators. The financial authorities have requested up to three months to review documents.
The picture appears to be much bleaker for firms that have failed to obtain ISMS documentation. The Fact quoted an official from the Financial Intelligence Unit, the regulatory body that will police exchanges as of September 24, as stating:
“After checking on the status of exchanges that have not applied for ISMS certification, we found that many have stopped trading cryptocurrencies and have already shuttered their businesses.”