No crypto exchange had applied for VASP license in South Korea, and it raises suspicion about whether all crypto exchanges are going to shut down.
South Korea is always known as a financially developed country as the country relies on exports of finished products like electronics, textile, ships, automobiles, steel, and some more. Meanwhile, cryptocurrency is spreading its wing across all financial spaces gradually, Eun Sung-soo, chairman of the Financial Service Commission (FSC), is hinting at a shut-down of all the countries cryptocurrencies exchanges saying the National Assembly has yet to receive any Virtual Asset Service Provider (VASP) applications required under a recently amended law going into effect later this year during a meeting. Estimation shows that there are 200 cryptocurrency exchanges in the country.
Searching for laws that were recently amended, we have found that South Korea’s anti-money laundering (AML) law and the Financial Transactions Reporting ACT (FTRA) were amended last. This amendment required VASPs to register with financial authorities, but no exchanges have applied to the FSC for registration yet. Where Sept. 24 is the deadline for crypto exchanges to get registered, time is running out with no application. Exchanges with high AML systems will have priority in getting approval.
Recently the government has issued a statement conferring authorities to implement a ‘’special enforcement period’’ from April to September. If crypto exchanges don’t come under registration within this period, they will ban them.
The highly significant capability for VASP registration is an official partnership with a local commercial bank. So far the country’s four largest exchanges have established such partnerships. So it raises a question whether these four can only survive the regulatory tidal flow or the crypto’s future in that country will march towards uncertainty.
While crypto has made a big space in the heart of Koreans, Eun’s remarks have a high impact on them. During the first quarter of 2021, the Big four registered 2.49 million new users. Among those registered, 64% of traders are young, and the remaining is in their 30s. So, any possible shut-down can hurt them to a high extent. Eun is thoughtful about the officialization of the industry. What he thinks is if the industry comes under regulatory approval, it will encourage speculation.
As the state doesn’t take responsibility for consumers being scammed, it remains a personal responsibility to protect against scams. According to Eun’s view, crypto trading is more speculative than stock trading. And so it’s so essential to come under legal jurisdiction. Such an incident was taken place in January 2018.