South Korea’s top financial regulator, the Financial Services Commission (FSC), plans to shut down 11 crypto exchanges. The reason for shutting down is non-compliance with the country’s regulations.
According to Korea Herald, these 11 crypto exchanges allegedly used fraudulent collective bank accounts. Due to this, the FSC is notifying the prosecution and the police of their alleged illegal activities. As of now, the crypto exchanges’ names aren’t known. However, they cannot get approval from the FSC now to continue their businesses.
As per the norms, crypto exchanges had to approve by the FSC before 24th December to continue operations. By doing this, crypto exchanges had a breather time so that they can comply with regulations. However, considering the latter date, crypto exchanges have already exhausted their six-month grace period.
To get approval from the FSC, crypto exchanges must partner with local banks and open real-name accounts for customers. However, banks aren’t comfortable partnering with crypto exchanges other than the top four: Bithumb, Upbit, Coinone, and Korbit.
This is why many mid-sized exchanges are announcing their suspension of services. Some of them include Darlbit that went out of business on July 15. Similarly, CPDAX is also terminating its services on 1st September.
However, the final nail in the coffin was the Information Security Management System (ISMS). Crypto exchanges had to obtain an ISMS certificate which required very high requirements. According to the publication, Bitsonic exchange announced on 30th July that it would temporarily stop providing services to renew its service systems to meet the ISMS requirements.