South Korean cryptocurrency exchanges that cannot meet up with the Financial Intelligence Unit (FIU) registration exercise are mandated to inform their customers before midnight today that they will be shutting down operations a week before the September 24, 2021 deadline.
The affected trading platforms have been instructed not only to inform their customers that they will be halting operations, but they will also need to provide detailed information about how their users can withdraw their funds.
“Should some or all services need to be closed, (cryptocurrency exchanges) should notify customers of the expected closing date and procedures to withdraw money by at least seven days before the closure,” South Korean Financial Service Commission (FSC) said in a statement published by Reuters today.
Compulsory AML Registration
Recall that the South Korean regulator instructed all digital asset exchanges operating within its regulatory purview to comply with its anti-money laundering (AML) rules by registering with the FIU or risk having their websites blocked if they fail to do so before the September 24 deadline.
Part of the registration exercise required exchanges to partner with banks to obtain accounts for real-name verification. Crypto trading platforms also have to get a security certificate from the Internet Security Agency.
Exchanges that obtain only the security certificates will be allowed to continue offering only a few services to South Koreans. However, platforms in this category will be prohibited from conducting settlements in the country’s official fiat currency – won.
Four Exchanges to Continue Offering Full Services
Of all the exchanges operating in South Korea, only four such as Upbit, Bithumb, Coinone, and Korbit have successfully completed all the registration requirements of the FIU.
Reuters noted that nearly 40 exchanges have disclosed that they will be suspending all their services as they are yet to comply with the registration requirement.
28 trading platforms, including ProBit, Cashierest, and Flybit, have already secured security certificates, which will enable them to continue operating in the country without making won settlements.
According to reports, smaller exchanges had issues partnering with banks because most traditional financial institutions chose not to collaborate with these crypto-related firms due to accountability and hacking risks.