South Korea’s cryptocurrency market continues to evolve under the weight of increasing regulatory pressures. Major crypto exchanges like Upbit have moved this week to delist or warn against certain digital assets they consider risky for investors.
As local reporters note, the trend was apparently triggered by the increasing interference by financial regulators in the operations of crypto service providers. Last week, the Korean Financial Intelligence Unit (FIU) reportedly contacted 33 crypto trading platforms to warn that it would hold a field consultation before Sept. 24.
The aim of these consultations is to check whether companies are complying with the requirements of the Law on Special Financial Transactions that came into force in March this year.
Ubit removed Maro, Paycoin, Observer, Solve.Care and Quiztok from the list last week and posted warnings for six assets on its English website on June 11th delist these six will be removed. As the Korean Herald notes, the first delistings led to a collapse in coin prices with typical losses in value of 50–70%. Aside from the investment warnings posted in English, Upbit’s new investment warnings reportedly cover 25 different assets, or around 14% of the coins listed on the platform.
In addition to Upbit, a total of 11 out of 20 exchanges that have received a safety management system certificate have taken similar steps, and Korea’s Financial Supervisory Service also contacted several exchanges this week asking them to provide the agency with the details of any delisted or suspended assets .
In addition to the agencies’ direct communication with the exchanges, the Korean Financial Services Commission (FSC), charged with overseeing the cryptocurrency market, has reportedly set up five new working groups, each with specific tasks related to the implementation of the new Korean crypto regulation from advising exchanges seeking registration or working with the National Assembly to adopting measures to improve the country’s cryptocurrency ecosystem.
Related: South Korea’s small crypto exchanges are facing increasing regulatory heat
The roles assigned to the groups are indicated in their nomenclature: Daily Situation Group, Reporting and Response Group, On-the-Spot Consulting Group, Capital Market Group and System Improvement Group. Under the auspices of the FIU, the groups will work with the Anti-Money Laundering Bureau of the Financial Supervisory Service, Korea Exchange Securities Market Headquarters, Korea Securities Depository, Korea Federation of Banks and Koscom.
Earlier this week, Cointelegraph reported that a new policy from the FSC requires banks to classify all crypto-exchange customers as “high risk”. The agency has also clarified its roadmap to ensure that crypto exchanges that apply for approval implement strong transaction monitoring and adhere to strict user ID requirements. After the final deadline of September 24th, the financial intelligence officers are tasked with reviewing the trading activities of the applicant crypto exchanges for a review period of three months.