South Korean crypto exchanges have begun to prepare lawsuits against the government and challenge it in constitutional court. If they fail to meet September’s regulatory deadline, they are required to close.
As of September 24, new regulations will be in force for crypto exchanges. These regulations have been already made law. However, none of the 60 crypto exchanges in operation have yet to meet the requirements for operating permits.
Even the “big four” national exchanges, Upbit, Korbit and Bithumb, are not yet able to secure key banking deals. Meanwhile, the Financial Services Commission (FSC), is set up to conduct spot checks at all 60 South Korean trading platforms.
However, exchanges remain hopeful that the FSC or the government will ease their stances before the deadline, but anger is growing in the crypto sector with a grim acceptance that “most exchanges” will still close on September 24, unless the government changes its mind.
According to Yonhap and Dailian, the chasing pack of larger non-big four exchanges is growing increasingly disgruntled with what they see as “unreasonable demands” placed upon them and the regulator’s “preferential treatment” of the big four.
The exchanges hope to change the FSC and government’s minds about the severity of regulations by direct appeals. However, media outlets suggest that they will not be silent if forced to close. They would be ready to start legal battles to ensure their survival and claim unfair treatment.
South Korean banks are now telling regulators that they don’t want them to be held responsible for the risk assessment of crypto exchanges.
Banks were told to conduct risk assessments on trading platforms in order to determine if they believe exchanges and senior management are suitable clients for business partnership. Exchanges won’t be able conduct anonymous, real-name banking without banking contracts. The government insists that any exchanges without banking partners will have to close.
As such, banks have been given the power of judge, jury, and executioner in the sector. They don’t want to take responsibility for hacking or fraud.
Per Seoul Shinmun, commercial banks “have requested that they not be held accountable” even should a case of money laundering occur at an exchange.
According to the media outlet, uncertainty is also plaguing government officials and financial sector executives. They are uncertain whether to continue building a strict cryptocurrency licensing system that could “shrink” the market or introduce “loose standards that may encourage speculation.”
According to the report, the authors found that opinions in politics are divided over the new regulatory methods. They could also be having second thoughts about the proposed banking protocols and exchange registration system.
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