Starting Thursday, all South Korea-based crypto businesses will now be subjected to the new, more stringent crypto reporting and registration rules called the Specific Financial Transactions Act. As per the new rules, all local crypto business operators will be required to directly report user information to the country’s Financial Services Commission’s Financial Intelligence Unit.
While the South Korean government ultimately intends for these brand new rules to prevent further crypto-based crimes, several smaller-scale crypto businesses have purportedly been unable to conglomerate with local monetary institutions. As a result, they are forced to shut down entirely, such as with the case of OKEx Korea. Although the exchange did not explicitly mention the new rules as a significant factor for closing, many believe that is just the case.
As per the announcement of OKEx, its South Korean branch will officially shut down operations as early as next month – warning its users to withdraw their holdings by April 7 entirely. After the specified date, OKEx Korea states that the exchange will no longer be held liable for any instances of losses due to customer withdrawal failures. The announcement further reads that the crypto exchange will accept withdrawal applications 24/7 up until 6:00 p.m. of April 7, local time.
Aside from OKEx, industry experts predict many more exchanges to close down following the particular act’s implementation. According to them, the Specific Financial Transactions Act will lead to damaging consequences for the vast majority of domestic crypto firms. This then might lead to a situation where only the four largest crypto exchanges in the country could promptly operate, thus, creating a monopolized market. And that may indeed be just the case, evidenced by the current number of exchanges that have so far complied with the stringent rules – 4 out of more than 100.