South Korea’s top financial regulator has sought to shut down 11 local cryptocurrency exchanges due to their involvement in illegal operations.
Darlbit and Bitsonic are two South Korean digital asset trading platforms that have just announced that they will cease operations, but the full list of exchanges that will close remains unknown.
Upbit and Bithumb, the country’s two largest crypto exchanges, have escaped the crackdown since they are among the few crypto trading platforms that offer real-name bank accounts to their users.
Since 2018, real-name registration has been required in South Korea in an effort to combat money laundering and other fraudulent practices.
Due to the poor risk-reward ratio of such arrangements, banks were hesitant to extend relationships with local bitcoin exchanges. Partnerships with major players such as Bithumb have been extended till September.
As a result, many smaller trading platforms found themselves in a bind.
The regulatory crackdown is not limited to local bitcoin enterprises. Foreign cryptocurrency exchanges must also register with the Korea Financial Intelligence Unit (KFIU) by September 24. Otherwise, they will have to close their doors or face criminal penalties.