Small and medium-sized exchanges in South Korea had a chance to express some of their grievances with the government during a recent meeting with financial regulators.
According to a report by South Korean news outlet D.Street, the Financial Services Commission (FSC) convened a closed-door meeting with 20 crypto exchanges on Thursday.
Inside sources quoted by D.Street say the closed-door session was a parley between the FSC’s Financial Intelligence Unit (FIU) and the 20 crypto exchanges where the former expressed the government’s desire to implement its virtual asset service provider (VASP) report.
Indeed, on May 28, the FSC issued a release stating its intention to strengthen its oversight of the crypto market to combat illegal activities. As part of the plan, crypto exchanges and other VASPs will be given a six-month grace period to register with the government.
This registration process includes obtaining Information Security Management System certifications and opening real-name trading accounts among others. The 20 exchanges involved in Thursday’s meeting are the only ones among the 60 VASPs currently operating in South Korea.
However, only the “big four” — Bithumb, Upbit, Korbit, and Coinone — have secured real-name trading accounts. At the meeting, the other 16 exchanges expressed their difficulties in satisfying the real-name trading requirement among other operational difficulties.
FSC officials reportedly sympathized with the difficulties being faced by the smaller exchanges and promised not to interfere with their relationships with South Korean banks. South Korean exchanges require banking partnerships to satisfy the real-name trading requirement.
However, the cost of obtaining such banking partnerships is reportedly beyond the means of many smaller platforms. As previously reported by Cointelegraph, Upbit’s fee payment to K Bank in Q1 2021 was 10 times more than the previous quarter.
Meanwhile, South Korea’s government has clarified the roles and responsibilities of regulatory bodies as concerning cryptocurrency regulations in the country.
South Korea’s crypto regulatory landscape has tightened in recent times with Anti-Money Laundering and capital gains tax policies among a raft of new laws.