South Korea Crypto Crackdown Wiping About $3bn Kimchi Coins

South Korean crypto traders report losses of more than $2.7bn as experts estimate the wipe-out of 2/3 of the country’s crypto exchanges in a regulatory overhaul of the world’s biggest digital currency market. South Korea’s financial watchdog, the FSC, set a deadline for September 24 for exchanges to register. They have to register as legal trading platforms. It is part of an attempt to tighten the country’s crypto sector. 

However, according to industry insiders and regulators, most local exchanges struggle to meet these conditions. Therefore, experts expect that almost 45 of South Korea’s estimated crypto operators will no longer function. Big exchanges, such as Bithumb, Upbit, Coinone, and Korbit, dominate South Korea’s crypto trading. It has a value of more than 91 percent of the country’s total trading volume.

Overview

A professor and head of the Cryptocurrency Research Center at Korea University, Kim Hyoung-Joong, estimated possible outcomes. According to his estimation, the mass shutdown of poorer exchanges might also eliminate 43 kimchi coins. The data from the industry showed that digital coins made up around 91 percent of South Korean crypto trading. It highlighted the market’s highly insecure nature.

Experts expect a bank run-kind situation near the deadline as investors can’t cash out of their alt-coins listed on small exchanges. This information also proved the head of a mid-sized exchange, Foblgate, Lee Chul-Yi. He added that they might soon find themselves poor while doubting if regulators can control the side effects. The FSC advised every exchange that fails to meet regulatory conditions to inform their clients of any possible closure by the middle of September. South Korean crypto exchanges need to partner with local banks to open real-name bank accounts for clients to get a license as a legal trading platform. However, local lenders are still afraid of being displayed to money laundering and other financial risks.