As many as 97% of all cryptocurrency exchanges in South Korea may close down amid a slump in trading engagement.
Reports highlight that blockchain and crypto initiatives now lean towards listing their tokens abroad, citing South Korea's increasingly restrictive trading regulations.
Conversely, exchanges in Southeast Asia are thriving as regulators continue to foster a supportive environment for crypto activities.
A Vast Majority of South Korean Crypto Exchanges Facing Financial Ruin
According to Business Korea, there's no clear resolution for the struggles besetting South Korea's cryptocurrency exchanges. It's a dire situation, with reports indicating that up to 97% of these entities are in precarious financial condition. imminent bankruptcy .
The decline in trading volume is a primary issue for many South Korean platforms, with only a select few making it to the top-100 crypto exchanges by daily trading metrics.
To make matters worse, blockchain ventures are shying away from listing on domestic platforms. This is happening even though the nation boasts a vibrant ecosystem of startups advancing distributed ledger technology (DLT). vibrant digital economy Increasingly stringent regulations have created a challenging climate for cryptocurrency business in South Korea, reportedly preventing investors from withdrawing their funds in the local currency, the Korean Won.
Regulatory Atmosphere Adding to Challenges
In July, South Korea's banks started scrutinizing crypto exchanges more closely with new anti-money laundering (AML) protocols. Exchanges that don't comply risk losing their banking facilities.
While major players like Coinone, Korbit, Upbit, and Bithumb may overcome these AML barriers, lesser-known exchanges could find it difficult. Close to 200 smaller entities are already unable to secure real-name virtual accounts with local banks.
For banks, heightened scrutiny is part of implementing new guidelines from the Financial Action Task Force (FATF) about the management of cryptocurrencies.
Bithumb and other exchanges have adjusted their terms to demonstrate readiness to assume full responsibility for any incurred losses, regardless of cause.
As previously reported by Blockonomi The languishing trading volume and lack of investor interest exacerbate an already grim outlook for South Korea's exchanges, following a challenging year in 2018. The lengthy bear market saw revenue reductions even among the big players.
Might Not Recover from Tough 2018
Of the four largest exchanges in South Korea, only one reported profits in 2018, and Bithumb's losses overshot those of the others. decimated Some exchanges have already ceased operations, while those remaining operational still face threats
from hackers based in North Korea.
South Korea's challenges are proving beneficial for incessant hacks , and nations in Southeast Asia. Bithumb has recently launched Bithumb Singapore, signaling a shift to regions becoming more accommodating to crypto activity.
Southeast Asia: Emerging as the New Crypto Haven
The Philippines' central bank is continuously issuing licenses for operating cryptocurrency exchanges, suggesting a possible business exodus from South Korea to Singapore , Thailand Rather than imposing harsh regulations, Thai authorities are crafting a comprehensive regulatory framework for exchanges, initial coin offerings (ICOs), and other virtual asset endeavors.
Osato, a dedicated Bitcoin enthusiast, frequently shares insights on the latest Bitcoin news. When he's not engrossed in industry events, he's likely trying to outdo his personal best in Scrabble or mulling over some life question. You can reach out to him at [email protected] Philippines .
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