Crypto traders in South Korea could reportedly lose assets worth more than $2.6 billion as the country’s digital asset exchanges stare down the barrel of impending regulations that could have a large impact on the crypto industry.
The Financial Services Commission, South Korea’s financial regulator, is requiring all crypto exchanges to register as legal trading platforms by September 24th.
In order to do so, the exchanges are now required to partner with local banks to open real-name bank accounts for their customers. Industry insiders reportedly tell the Financial Times (FT) that nearly 40 of the country’s some 60 exchanges won’t be able to satisfy the new regulations.
Kim Hyoung-joong, a professor and head of the Cryptocurrency Research Center at Korea University, tells FT that the shuttering of exchanges could reportedly imperil 42 “kimchi coins,” which are altcoins on local exchanges that are traded mostly in Korean won (KRW).
Lee Chul-yi, head of Foblgate, a mid-sized exchange, says the regulations could cause the modern-day equivalent to a bank run.
“A situation similar to a bank run is expected near the deadline as investors can’t cash out of their holdings of ‘altcoins’ listed only on small exchanges. They will find themselves suddenly poor. I wonder if regulators can handle the side-effects.”
Some international exchanges have already responded to the new regulations. Binance discontinued KRW trading pairs last month.
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