With under a month remaining before new crypto exchange regulations take effect in South Korea, it appears that there will be no reprieve, no moratorium, and no extensions on the enforcement of the Act on Reporting and Use of Specific Financial Transaction Information. Crypto exchanges that are unable to meet stringent new compliance protocols by Sep. 24 will be forced to cease operations or face severe penalties.
We approach the end of an era. What does this mean for the concept of a borderless currency? Is it still a dream, or was it always fantasy?
Several exchanges have already begun folding their tents, and the South Korean government appears more than comfortable with decimating the competitive field. It’s noteworthy that the overwhelming majority of exchanges on the chopping block are foreign-owned. Of course, maybe that was the point. The deck had always been stacked against smaller and mid-sized exchanges, particularly foreign-owned operations that weren’t as well connected to the existing governmental and banking power structures within the country.
Investors and crypto players within South Korea are already migrating towards the domestic Big Four, with Upbit emerging as the runaway leader. And why not? With so many Virtual Asset Service Providers eager to meet regulations but logistically unable due to political pressure and economic disincentives imposed upon required banking partners, the government isn’t leveling the playing field as much as it’s simply knocking unwanted game pieces off the board.
We don’t know exactly what the South Korean crypto scene will look like this time next month, but more than likely it will resemble an entirely new planet, with new terrain and new atmosphere. The survivors will not be a testimony of Darwinian fitness, but rather a handpicked, ethno-politically engineered roster indebted to those that cleared the competition.
You’d be well permitted to regard this as inherently unfair. What’s fairness got to do with it? Good question. Perhaps little, when staring down the barrel of a national edict. Who needs fairness when exchanges can be broken? As you hum that Tina Turner classic in your mind, remember this stark and terrible truth: legal and fair are two very different things.