South Korea Plans to Close Cryptocurrency Exchanges

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Cryptocurrencies are quite popular in South Korea, but the situation might change in the near future, as the country’s top regulator plans to close cryptocurrency exchanges by September. Eun Sung-soo is the current head of the country’s Financial Services Commission (FSC). He made this known at a meeting in the country’s parliament.

This news came as a shock for two reasons. Many people think that the country’s positive approach to cryptocurrencies helped China to alter its position. In the beginning China issued threats against blockchain technology. However, it changed its position. Also, Asia is a major driver of cryptocurrency with its high-speed internet as well as young population.

Officials in South Korea insist it is just a regulatory decision and nothing more. Last week, Eun Sung-soo stated that cryptocurrency exchanges are not complying with the law. The Financial Services Commission plans to take measures to improve the situation.

The country earlier passed laws that require cryptocurrency exchanges to register as virtual asset service providers (VASPs) The Anti-Money-Laundering Law and the Financial Transaction Reporting Act require all exchange platforms to be officially registered. They also have to submit VASP applications.

Cryptocurrency exchanges and regulations

The Financial Services Commission has not received any VASP applications so far and this fact underlines the severity of the problem. The FSC made it clear that it will close cryptocurrency exchanges by September should the status quo continue.

Many people believe that the new policy would remove small exchanges in South Korea. The prerequisite for an application for VASP status is to have a partnership with a local bank. It will be tough to comply with this requirement. Getting an official partnership may prove to be difficult in the case of smaller exchanges. So far, only the top four exchanges in South Korea have such partnerships.

Nonetheless, the country’s government might change its position after taking into account all factors. South Korea is the world’s third-largest cryptocurrency market and harsh decisions have the potential to affect the price of cryptocurrencies. Furthermore, the local politicians are looking for ways to protect investors as tax season looms.

The country is preparing to impose a 20% tax on income from cryptocurrency transactions starting in 2020. Any annual gains of more than 2.5 million won ($2,253) from trading cryptocurrencies will be subject to a capital gains tax.

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