Korea’s regulators may close cryptocurrency exchanges

Korea’s regulators may close cryptocurrency exchanges. December. 11, 2017 07:20. by Yoo-Hyun Kang, Joo-Young Jeon yhkang@donga.com,aimhigh@donga.com.

The Korean government is apparently pondering over intense regulations on cryptocurrencies including the closure of small virtual money exchanges in the country and restrictions on the amount and requirement for an investment through digital currency. This is seen as a belated move to control cryptocurrency exchanges as an increasing number of people that include office workers, housewives and even young students are rushing to make money through virtual money.

The Financial Services Commission (FSC) is planning to propose an amendment to the “Act on the Regulations of Conducting Fund-Raising Business Without Permission,” which would ban the operation of cryptocurrency exchanges in the first half of next year in principle, according to related ministries on Sunday. If passed, the revised bill will make it mandatory for digital currency exchanges to meet certain requirements such as the introduction of consumer protection measures or compliance with anti-money laundering laws and regulations.

“Major cryptocurrency exchanges such as Bithumb, Korbit and Coinone may not be hit hard by the newly proposed regulations, but small and medium sized exchanges currently surging in numbers will likely to be shut down,” said an industry insider.

A task force team consisting of the Ministry of Justice, FSC, the Ministry of Strategy and Finance, and Bank of Korea will also convene a meeting this week to discuss regulatory measures on virtual money. The Ministry of Justice is currently reviewing the various levels of measures, ranging from putting a limit on the amount and requirement for making an investment in digital currency to completely banning domestic virtual money exchanges from operating.

With the government embarking on discussion on regulations, the virtual currency market panicked this weekend. The price of bitcoin reached a record high of 24.97 million won as of 9 a.m. last Friday, but plummeted by as much as 34 percent to 16.52 million won in just eight hours. On Sunday, the value of Bitcoin even dropped to around 13 million won.