South Korean financial market authorities are seeking customer data from the banks to identify all the cryptocurrency exchanges operating in the country,
According to a report by The Korean Herald on Thursday, multiple financial regulators are summoning the major banks to provide data on the status of their businesses with cryptocurrency exchanges. They are seeking details of corporate accounts and even updates on the banks’ monitoring methods.
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This step came when the country is bringing strict rules for the booming crypto industry. Under the new rules, all South Korean crypto exchanges have to maintain real banking accounts under the name of each client.
Though the big four crypto exchanges in the country, Upbit, Bithumb, Coinone and Korbit, have managed to operate with appropriate banking support, smaller exchanges are still struggling to get a banking partner.
“Currently, cryptocurrency exchanges can operate without permission from the government, which is why it is difficult to identify the exact number of cryptocurrency exchanges,” an anonymous official told the local media.
“One way to find out is to track corporate bank accounts that collect customers’ funds.”
Can Small Exchanges Survive?
The South Korean officials estimate that between 100 to 200 smaller cryptocurrency exchanges are operating in the country without any proper authorization. The regulators are now planning to impose sanctions on all these exchanges after obtaining the data from the banks as the grace period for operations with relaxed banking support finishes in September end.
Further, crypto exchanges need to regularly report operational details to the regulators, failure to which might attract a jail term of up to five years or a fine of up to 50 million won (around $44,000).
Meanwhile, many South Korean crypto exchanges are shutting their doors as they find it hard to comply with the revised laws. Most recently, Daybit, which is operated by Chain Partners, announced the termination of its services in June, while global giant, OKEx had already shuttered its South Korean operations.
Industry experts are estimating that several other smaller local exchanges will also close down in the upcoming months.