Over 50 per cent of South Korea's cryptocurrency exchanges are set to be shut down in the coming days as operators seek to comply with stringent new laws imposed by the financial watchdog.
35 of the 63 exchanges in operation have not received any certification from the Korea Internet and Security Agency (KISA) or final approval from the Financial Services Commission (FSC). The three to six month licencing process has left exchanges scrambling to obtain approval before the September 24 deadline.
The move comes amid worldwide calls for crypto regulation, however, the rapid closure of more than half of exchanges has the potential to create a monopoly and endanger consumer protection. South Korea has been at the forefront of digital asset technology, having proposed tangible crypto taxation and a blockchain based drivers licence.
The FSC also plan to form a crypto bureau to supervise digital assets, although after September 24 it is likely their workload will be considerably lighter. Regulatory difficulty is not uncommon, Singapore for example have had a tumultuous year in the digital space, first by announcing popular exchange Binance was operating illegally before banning cryptocurrency as a payment tool.
While the United Kingdom opted for a similar deadline-based licencing process, companies wishing to engage in crypto asset activity have had a year to lodge their applications. This has not prevented a stronger call out by regulators against cryptocurrency ventures and social media 'pump and dump' scams.
With Australia's own regulatory guidance expected in a little over a month, consumers and regulators should expect a report centred around clear growth that can encourage a dynamic future for the industry. Let’s hope the lessons from overseas are learned in Australia.