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Only ten cryptocurrency exchange companies have registered with the KFIU, while only four have additionally secured contracts with banks, which was the second requirement.

On Thursday, 23 September 2021, six Korean crypto exchanges, Five, Gdac, OK-BIT, Prabang, Flat Thai X made progress with regards to the regulatory compliance requirements set out by the Korean Financial Intelligence Unit, with a further 18 expected to file documents by Friday, September 24. If these are completed, it would take the tally to 28 registered exchanges. These 28 include what is collectively known as “The Big Four”, namely Upbit, Bithumb, Coinone and Korbit, who account for over 90% of crypto asset trading volumes in the country of South Korea. The Big Four have secured contracts with banks for real-name verification of accounts, and have received certification from the Korean Internet And Security Agency, meaning that their registrations were eligible for submission to the KFIU.

Under-resourced exchanges likely to be most affected

Certain security infrastructure was required from exchanges by the Korea Internet and Security Agency (KISA) to reduce money laundering risks. In addition, partnerships with local banks have to be secured, before approval is granted by the Financial Services Commission. Banks bear the risk if funds are used for financial crimes, so they have been reticent to partner with exchanges that do not have the resources to implement comprehensive anti-money laundering systems in line with KISA requirements. Industry experts have estimated that at least fifty exchanges will close down, or reduce service offerings, due to them not meeting all of the requirements.

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