After September 24th, only a few virtual asset exchanges in South Korea have survived. That day was the deadline set by the South Korean financial authority for reporting compliance with the country’s new cryptocurrency regulations.
South Korea’s four major exchanges Upbit, Bithumb, Korbit, and Coinone meet all regulatory requirements and are the only four exchanges that are allowed to fully operate, including Korean won to cryptocurrency trading services. The other 25 domestic exchanges have already met one of the requirements, which is to obtain information security certification, but have not met the second requirement, which is to provide users with real-name accounts to obtain bank contracts. Therefore, these exchanges are only allowed to provide currency services to continue their operations.
With the continuous strengthening of the governance of the virtual asset industry, both types of exchanges hope to expand their business scope and reduce their dependence on encrypted transaction fees. New projects launched by major exchanges include NFT, DeFi, Meta universe, and so on.
Korbit is Korea’s first and only exchange to open an NFT market. Korbit representative Oh Se-jin said: “Through Korbit’s NFT market, companies can maximize the use of the digital value of intellectual property rights, and while earning transaction fees, they can also explore new business models.” Korbit also opened up itself. Korbit Town, the latter as a social community, users can communicate with each other or give away cryptocurrency.
Bithumb partnered with commercial and distribution company Bucket Studio to establish Bithumb Live, which will be launched in November. It plans to become South Korea’s first multi-commerce platform that integrates NFT, encrypted payment system, Metaverse and online commerce. Bithumb and Bucket Studio each invested 6 billion won (approximately US$5.1 million) to become the two major shareholders of the online shopping platform “The LIP” that will be transformed into Bithumb Live. Dunamu is the owner of Upbit, the largest exchange in South Korea, and it also acquired Tenuto, a startup based on Metaverse.
At the same time, Coinone provides users with DeFi services through Coinone Plus. Coinone Plus provides cryptocurrency pledge services for investors. Investors can entrust their assets to the blockchain network to obtain a certain amount of cryptocurrency in return. In September last year, Upbit launched a beta version of the pledge service, which was closed in January this year due to a service update.
Lee Byung-uk, a professor of digital finance at the Seoul Graduate School of Science and Technology (aSSIST), said in an interview: “The (popularity) of the cryptocurrency market has extreme ups and downs. These exchanges are always worried. I think this is a natural one. Efforts to survive. This trend is currently in a state of volatility, but in the future, the cryptocurrency market will be largely affected by regulation.”
On the other hand, exchanges that have not yet met all government standards and only operate under the currency service are still struggling to achieve full compliance, and some exchanges have begun to prepare new projects.
Exchange Coredax said it is focusing on strengthening security technologies and anti-money laundering systems rather than entering new businesses. The exchange recently announced that in order to continue to develop its existing business, it will recruit 53 new employees.
Another exchange, Foblgate, stated that the company is “internally discussing possible new projects” but is focusing on complying with existing crypto regulations. According to reports, Aprobit also plans to launch new businesses in addition to token trading.
In addition to the cryptocurrency exchange regulations that came into effect in September, South Korean authorities also plan to tax virtual asset income from January 1, 2022. According to the anti-money laundering guidelines of the Financial Action Task Force (FATF), the exchange The system must be established before March next year.
By then, the South Korean encryption industry may usher in a new wave of supervision.