- South Korea’s financial regulator has set a new deadline for exchanges in the country to register as legal trading platforms.
- Local exchanges are struggling to meet the conditions set out by the financial watchdog.
- The country’s crypto traders will be bracing for losses of over $2.6 billion in kimchi coins.
South Korea’s Financial Services Commission (FSC) has set a deadline for overseas and local crypto exchanges to register as legal trading platforms. While the country aims to tighten regulations on the digital asset sector, nearly two-thirds of all exchanges are expected to be shut down.
$2.6 billion in crypto to be wiped out
South Korea’s financial regulator set a deadline for foreign and local crypto exchanges to register as legal trading platforms by the end of September. However, most local exchanges are struggling to meet the conditions set out by the regulator. This could result in nearly 40 crypto exchanges being shut down by September 24.
Currently, the country’s crypto trading industry is dominated by four major exchanges – Upbit, Bithumb, Korbit and Coinone. These platforms account for over 90% of the country’s total digital asset trading volume.
According to Kim Hyoung-Joong, a professor and head of cryptocurrency research at Korea University, smaller exchanges could potentially be shut down and could put an end to kimchi coins. These are alternative digital assets that are listed on local crypto exchanges and mostly traded in the country’s native currency, the Korean won.
For crypto exchanges to qualify as a legal trading platform, the firms must work with local banks to open accounts in the real names of customers. Local banks have been hesitant to do so due to fears of being exposed to illicit activities, including money laundering.
So far, around 20 exchanges have met some of the conditions set out by the financial watchdog by enabling systems for collecting personal information to allow crypto trading on the platforms. However, industry insiders believe that these operators would still struggle to survive in the industry, given the limited size of their businesses.
Cho Yeon-haeng, the president of Korea Finance Consumer Federation, said that huge investor losses are expected if trading is suspended. At the same time, crypto assets would be frozen at various smaller exchanges.
Should the crypto exchanges be unable to meet the new requirements before the deadline, the FSC advised digital asset firms to inform their customers of potential closure before September 17. If any virtual asset service providers continue to operate in the country without proper registration, responsible parties will face up to five years of imprisonment or a fine of up to roughly $43,500.
The crypto exchange subsidiary of Japanese tech giant LINE has reportedly been limiting its services in South Korea. LINE could be one of the first of potentially many foreign digital asset exchanges that have decided to halt or limit services in the country.
The South Korean government has continuously cracked down on cryptocurrency exchanges with extensive restrictions set on cross-border remittances involving cryptocurrencies to prevent money laundering.
This comes after many reports of a suspicious increase in bank transactions from South Korea to China. The FSC believes that this was due to the emergence of the Kimchi Premium seen earlier this year, which led to certain Chinese investors searching for cross-border arbitrage opportunities.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks

Crypto Today: BNB, OKB, BGB tokens rally as BTC, Shiba Inu and Chainlink lead market rebound
Cryptocurrencies sector rose by 0.13% in early European trading on Friday, adding $352 million in aggregate valuation. With BNB, OKB and BGB attracting demand amid intense market volatility, the exchange-based native tokens sector added $1.9 billion.

US SEC may declare XRP a 'commodity' as Ripple settlement talks begins
The US SEC is considering declaring XRP as a commodity in the ongoing settlement talks with Ripple Labs. FOX News reports suggest Ethereum's regulatory status remains a key reference for XRP’s litigation verdict.

Cardano Price Prediction: ADA could hit $0.50 despite high probability of US Fed rate pause
Cardano price stabilized above $0.70 after posting another 5% decline in its 3rd consecutive losing day. Multiple ADA derivatives trading signals are leaning bullish, but the US trade war impact outweighs the positive shift in inflation indices.

Stablecoin regulatory bill receives green light during Banking Committee hearing
The US Senate Banking Committee voted on Thursday to advance the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, which aims to establish proper regulations for stablecoin payments in the country.

Bitcoin: BTC at risk of $75,000 reversal as Trump’s trade war overshadows US easing inflation
Bitcoin price remained constrained within a tight 8% channel between $76,000 and $84,472 this week. With conflicting market catalysts preventing prolonged directional swings, here are key factors that moved BTC prices this week, as well as key indicators to watch in the weeks ahead.

The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.