According to Business Korea, hundreds of minor crypto exchanges in South Korea could run smack into heightened scrutiny for failing to abide by proposed enhanced know-your-customer (KYC) regulations, which would require exchanges to only provide services to users with “real-name accounts” issued by local financial institutions.
Earlier this month, the Financial Action Task Force, an intergovernmental organization under the G7, proposed guidelines that encourage all crypto exchanges to share customer data.
Although industry executives and experts have indicated that the ruling of the FATF is highly impractical and may be counterproductive, many countries in the G7 and the G20 – including South Korea – are likely to follow the recommendations of the FATF.
Local reports have indicated that hundreds of crypto exchanges in South Korea may be kicked out of the region or pressured to close down their services based on their spotty track records if the businesses do not swiftly implement robust internal management systems.
However, major crypto exchanges in South Korea including Bithumb, UPbit, Coinone, and Korbit have been using real-name accounts under the strict guidelines issued by the Financial Services Commission (FSC) and as such, the big five exchanges will not be affected by the recent FATF ruling.
Considering that the overwhelming majority of trades in South Korea are processed through the big five exchanges, primarily Bithumb and UPbit, even if small exchanges are forced to close down temporarily or permanently, it will likely have no noticeable effect on the local exchange market.
The Business Korea report read:
“As Deputy Prime Minister and Finance Minister Hong Nam-ki agreed to actively implement the exchange management and supervision plans from the FATF’s financial recommendations at a recent meeting of central bank governors and finance ministers of the G20 countries,