The Financial Services Commission (FSC) is the central fiscal regulator in South Korea. Following the new crypto trading requirements issued by the regulatory authority last month, many of the local crypto enterprises apply for new registration with FSC. However, the native crypto exchanges have gone on to overlook the new regulations.
The cold war between the local cryptocurrency exchange markets and the South Korean regulators has been going on for the better part of the current year.
Financial Services Commission is Making New Policies to Regulate Crypto Sector
One of the main reasons that encourage the local South Korean exchange from complying with the FSC regulations is the suspicion of monopoly. These industry actors claim that they are ensuring the registration of their users under authentic names like the local banks. However, the FSC regulators argue that to protect the interest of small investors, better security measures are necessary.
On the other hand, the South Korean banks have refrained from performing any financial audit or risk management survey to ensure the security of their account holders. Only four exchanges, i.e., Coinone, Korbit, Upbit, and Bithumb, have the financial back-up from the banks. These four exchanges also make up for 90% of the total trade volume for cryptocurrencies in South Korea.
Kimchi coins are the placeholders for small tokens that are listed on cryptocurrency startups based in South Korea. As per Kim Hyoung-Joong, a professor at Korea University, if the FSC does not soften its stance on the local crypto markets, it can result in the loss of 42 Kimchi coins. Furthermore, 40 out of the total 60 native crypto exchange platforms based in South Korea can go out of commission.
President of the Korea Finance Consumer Federation, Cho Yeon-haeng, recently told the media that the sudden closure of these native crypto trading platforms would result in huge investor losses. Meanwhile, FSC authorities have directed the local exchange operators to issue a warning of withdrawal to their consumers as soon as possible. Many experts believe that the government is trying to discourage the young investors’ practice of drawing out heavy loans for risky crypto investment in the COVID economy.