Upbit, a major South Korean crypto exchange, has become the first cryptocurrency exchange to register with local regulators as a crypto crackdown looms in the 6th largest Asian economy.
According to reports, the exchange has already submitted a business report to the Korean Financial Intelligence Unity (FIU), registering itself as a digital asset business.
This would put the cryptocurrency exchange under the supervision of the country’s top financial regulator, the Financial Services Commission (FSC).
Upbit is one of the fourth-largest cryptocurrency exchanges in South Korea, which makes its registration a major milestone to the industry among regulatory concerns in the country.
With the exchange accounting for over 80% of the local cryptocurrency market, its registration may facilitate the process for other exchanges in the country.
It is expected that at least two other cryptocurrency exchanges will have filed their own reports by the end of August, with a deadline set to September 24th looming over the industry.
Crypto exchanges who failed to register by then might see their legal operations considerably limited in the country.
Many exchanges in the country are having difficulties with the registration process due to a partnership with a bank being required, which has proven difficult for many.
This requirement is the result of a demand for crypto exchanges to do real-name verification via bank accounts.
The New Regulation Is Affecting The Market
While the deadline is still one month away, the effects of the new regulation have already been felt by the local cryptocurrency industry.
Back on August 13th, Binance officially discontinued all trading pairs that used the Korean Won, as well as P2P merchant applications and language support.
Binance’s move is the result of the FIU’s decision to also demand foreign exchanges to comply with the regulation by registering. At this time, Binance already has several issues originating from clashes with regulators, which makes this decision unsurprising.
Several cryptocurrency exchanges operating in South Korea have been unable to establish partnerships with local financial institutions, preventing them from registering to comply with the new regulations.
Some of the exchanges that have been able to enter such a partnership include Bithumb, Coinone, and Korbit, making them the likely candidates to register in the near future.
With the deadline getting closed by the hour, the South Korean Cryptocurrency industry is bracing for the possible ramifications.
Experts believe that less-popular altcoins will be the most affected by the regulator’s decision as cryptocurrency exchanges are likely to delist them.
South Korea’s Regulators Clash With Investors
South Korea is one of the most important technology centers in the world, with its population consisting of a high percentage of early adopters and tech-savvy people.
It is not surprising that a 2021 survey showed that 40.4% of South Korean workers had already invested in crypto.
However, the country’s government has not been so friendly toward crypto in recent years, going as far as taking local crypto exchanges to the brink of bankruptcy back in 2019.
However, it would be in July of this year when South Korean regulators established that crypto regulators would need to disclose risk management, partner with banks to verify the identity of their users, and get a certificate from the Internet Security Agency.
While this new law is intended to target money laundering and the risk of high leverage betting among the younger population, its potential impact on the local crypto economy is larger.
Local financial institutions are likely to consider the listings crypto exchanges have before accepting a partnership, forcing these exchanges to delist certain coins to facilitate the process.
Officials of the Financial Services Commission said that exchanges that don’t comply would not necessarily have to close but would be unable to operate with the national currency, which is sure to prevent exchanges from operating normally.