Upbit has become the first South Korean cryptocurrency exchange to register with the Financial Intelligence Unit (FIU), a local media outlet reported.
All crypto trading platforms operating in the country need to register themselves with the agency before the deadline of September 24. If an exchange fails to register themselves within the deadline, they will be termed as unregistered exchanges and might face a blockade in the country.
Financial Services Commission (FSC) Chair Doh Gyu-sang told the local media that the agency is expecting to see the registry of one or two more exchanges by the end of this month.
Scarce Banking Partnerships
But, the requirements of the registration are often criticized by the comparatively smaller South Korean exchanges. To register with the FIU, exchanges need a banking partner and maintain real-name bank accounts for all of their clients. So far, only four major local exchanges have fulfilled this mandatory requirement.
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Upbit’s banking partnership for real-name accounts is with online-first K-bank, while three other local crypto giants, Bithumb, Coinone and Korbit, which have also inked banking deals and are likely to be the next ones to receive FIU approval.
Meanwhile, South Korean banks remain hostile towards crypto exchanges and are not taking them as partners. Additionally, this has jeopardized the existence of locally operated smaller exchanges. Many local exchanges have already shuttered, citing the harsh regulatory requirements.
“[Korean crypto exchanges] are having difficulties to get real-name accounts from local banks,” an anonymous insider told The Korea Herald earlier. “Out of more than 100 exchanges, we are very likely to see more closures.”
Foreign exchanges offering services to South Korean customers need to comply with the local rules, which the FIU also specified. This move led to the closedown of the Korean operation of OKEx and most recently Binance, which recently stopped offering trading pairs and payment options with the South Korean won.