The deadline for registration of domestic cryptocurrency exchanges is the 24th of next month, but it has been found that there is not a single exchange that meets the requirements. There is a growing concern that many of the 80 crypto exchanges estimated to be operating in Korea will have to close after the 25th of next month. In order to prevent confusion due to the closure of such a heap of cryptocurrency exchanges, the government is planning to relax some requirements, such as allowing coin transactions that do not trade in KRW even if they do not obtain a real-name bank account.
The Financial Services Commission announced the results of on-site consulting for virtual asset operators (cryptocurrency exchanges) on the 16th.
On-site consulting was conducted for 25 domestic cryptocurrency exchanges for a month from last June, and all of them have obtained or are under review by the Korea Internet & Security Agency (KISA). The FSC explained that it is in the top 30% of 80 exchanges.
Nevertheless, most of these exchanges are found to be far below the permit requirements, so it is expected that there will be considerable difficulties in registering within the deadline.
ISMS certification, which is the basic requirement for registration… 40% of crypto exchanges under review.
Re-verification of real-name accounts maintained by the four major exchanges, such as Upbit and Bithumb.
As the results of on-site consulting for domestic cryptocurrency exchanges are lower than expected, the financial authorities are also showing signs of panic. It is interpreted that the government’s decision to take a step back from its original policy and ease some of the requirements ahead of registration under the Specific Financial Information Act is to minimize the side effects of the closure of the exchange.
“The level of internal control of the coin exchange is grade F”
The registration requirements suggested by the financial authorities are △Acquisition of the Information Security Management System (ISMS) certification from the Internet & Security Agency △Operating a deposit and withdrawal account with real-name verification △Exceeding 5 years after the execution of fines or more punishments against business operators (including representatives and executives) has ended △Registration cancellation After 5 years, etc. In addition, although the establishment of an anti-money laundering system is not a requirement for direct reporting, it has to go through a pre-examination by the financial authorities because the relevant obligations must be fulfilled after registration.
Only 33 exchanges have received ISMS certification, which is the most basic requirement, including 20 crypto exchanges and 13 exchanges under review. Of these, only four exchanges that operate real-name bank accounts still exist: Upbit (K-Bank), Bithumb/Coinone (NH Nonghyup Bank), and Korbit (Shinhan Bank). However, it is known that these four companies are also being re-verified as to whether they maintain real-name accounts according to the “Virtual Asset Business Money Laundering Risk Assessment Guidelines” newly prepared by the Federation of Banks.
It is reported that the level of internal control for stable maintenance of coin transactions also failed. An official from the financial authorities pointed out, “Compared to the stock market, the fairness of market order, safety of customer assets, and system stability are not properly secured.”
In addition, the financial authorities judged that the system for identifying and analyzing the money laundering risk inherent in cryptocurrency transactions and differentiating the management level according to the level of risk is insufficient, and the ability to detect illegal activities such as related crimes is insufficient.
Government “partially easing some of the requirements… Minimize the closure of crypto exchanges”
In response to this situation, the financial authorities also plan to partially ease the registration requirements to minimize the closure of exchanges next month and induce a soft landing. Even if you cannot obtain a real name bank account, which is the biggest obstacle, we plan to receive a report as soon as you trade coin to coin. In addition, even if the anti-money laundering system is not enough right now, if there is a possibility of improvement in the future, it will allow registration as much as possible and continue to support the business rather than closing the business.