Source: AdobeStock / Chee-Onn Leong
South Korean blockchain organizations have told regulators that it will be impossible for the nation’s crypto exchanges to meet a September 24 registration deadline and want six more months to prepare – although it looks like their pleas may have fallen on deaf ears.
As previously reported, none of the nation’s trading platforms currently have the required paperwork in place and only a few have obtained Information Security Management System (ISMS) certification. Additionally, a joint regulatory audit this week found that zero out of 33 leading exchanges had banking contracts in place, with anti-money laundering protocols, management and security issues also unresolved.
This state of play will essentially mean that barring a massive turnaround in the next four weeks, no crypto exchanges will be in a fit state to register with the Financial Services Commission (FSC)’s Financial Intelligence Unit.
And that would bring crypto trading to a screeching halt in a nation where investment has boomed this year: unregistered exchange operators will face hefty prison sentences and fines after the deadline passes.
Politicians have warned of a “shutdown crisis” coming in September, with many smaller exchanges already throwing in the towel.
At an official meeting between the Korea Fintech Industry Association, the opposition lawmaker Cho Myung-Hee and the FSC, the FIU, the Financial Supervisory Service and the Federation of Banks, the exchanges made their case.
Per TVChosun, one exchange CEO told the regulators that it was “physically impossible” for trading platforms to have the necessary protocols in place by next month.
A leading academic, Kim Hyung-Joong, a blockchain-specializing professor at Korea University, also stated, “There is a concern that the closure of exchanges will harm the public.”
But the regulators appeared unmoved by the appeal, and the FSC indicated it would not stay its hand.
An official was quoted as stating that “a year and four months” had already gone by since the National Assembly approved the legislation that will force the changes. The legislation promulgated in March this year, with a six-month grace period for adoption.
The same official stated that “giving” exchanges “an additional six months will not change anything.”
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Learn more:
– All of South Korea’s Crypto Exchanges Fail their Regulatory Audits
– ‘Nerve-wracking’ Wait for S Korean Crypto Investors, 70% of Crypto Firms’ Sites Down
– Smaller South Korean Crypto Exchanges Begin to Shutdown, Suspend Services
– Signs of a Crypto Regulatory Climbdown from South Korea’s Ruling Party
– S Korean Regulator to Force Crypto Overseas Exchanges to Abide by its Rules
– Korbit Reopens Offline Customer Service Center in Seoul’s Busy Gangnam