New regulations came into action in South Korea and anonymous trading is long gone. This means that both exchanges and banks have to do more in order to comply with the verification requirements.
New regulations came into action in South Korea and anonymous trading is long gone. This means that both exchanges and banks have to do more in order to comply with the verification requirements. The exchanges and traders had time until January 30 to prove their identity and use only verified accounts and those who failed to do so are out of the game.
One of the online markets affected by the new government measures is Coinpia. Currently, the exchange has put on hold its operations due to bank-related issues. KRW deposits are blocked in accordance with new regulations and this has suspended all transactions. Coinpia states that their accounts have been frozen because of the non-anonymity legislation and this is the only reason why traders cannot access their funds.
The fun part is that only not so popular exchanges have similar problems while their major rivals are operating at full force. Banks are reluctant to engage with cryptocurrency markets with the big four being an exception. However, the Financial Supervisory Service recently raided the six largest exchanges while the Korean Customs Service suspect that near $600 million are held by organized crime in Korean exchanges.
The South Korean Blockchain Association made an announcement via Business Korea that perhaps the proper way to solve the problem is by launching self-regulation commission and directly approach the money-laundering problem. Undoubtedly, many investors will go through hard times because of small exchanges’ inability to find adequate bank support. We already see the signs of an emerging monopoly in cryptocurrency markets in the country.
Once small markets disappear investors would be forced to relocate to bigger crypto exchanges and many fear that this will slow down innovation and would have a negative impact on the ecosystem. So far banks and some exchanges are failing to find a way to both comply with the regulations and continue their operation at the same time. And if this is not to change soon exchanges will just shut down.
Coinpia clarifies that it is working towards finding a solution and that traders who would wish to withdraw their funds could do it because the South Korean consumer regulation rights protect them.