As the cryptocurrency market shows signs of overall recovery, Coin Market exchanges are facing severe operational difficulties and a wave of closures. While the surge in Bitcoin prices has increased investor interest, leading to optimism for improved performance among Won Market exchanges, Coin Market exchanges have not benefited from these conditions.
According to the Financial Intelligence Unit (FIU) of the Financial Services Commission, the majority of domestic Coin Market exchanges are in a state of complete capital erosion, primarily due to their inability to conduct transactions in Won, stemming from unsuccessful partnerships with banks for real-name accounts. This situation is expected to worsen with the upcoming implementation of the Cryptocurrency User Protection Law and other stricter regulations scheduled for July.
Concrete examples include Coin Market exchanges like ProBit, which have declared service termination, highlighting the severe crisis these platforms are enduring. ProBit announced its decision to cease operations through its official website, advising customers to withdraw their deposits and cryptocurrencies before the service ends. In addition to ProBit, several other Coin Market exchanges, including Cashierest, Coinbit, and Huobi Korea, have already shut down.
This trend of closures originates from structural issues faced by Coin Market exchanges. The inability to process deposits and withdrawals in Won and only supporting transactions between cryptocurrencies like Bitcoin causes inconvenience for investors and hampers the acquisition of new users. Specifically, the hassle for new entrants to purchase coins through other exchanges that support Won transactions significantly diminishes the competitiveness of Coin Markets.
The upcoming VASP renewal inspection in the latter half of the year poses another challenge for Coin Market exchanges. The need for professional consulting to pass the renewal application and the heightened inspection criteria are imposing additional burdens on already financially troubled Coin Markets, leading to an increase in exchanges opting to cease operations early.
Ultimately, the phenomenon of closures among Coin Market exchanges showcases the dual trend in the cryptocurrency market, revealing the grave crisis faced by Coin Markets unable to transition back to Won Markets. This situation calls for structural changes in the cryptocurrency trading landscape and is expected to significantly influence future market projections.
