South Korea has taken decisive action, directing its domestic cryptocurrency exchanges to maintain reserves of at least 3 billion won (about $2.3 million).
This directive is based on the “Guidelines for Operating Real-Name Accounts for Virtual Assets”. Federation of Banks of Koreais due to come into force in September. Its main purpose is to protect users, especially in the event of cyberattacks or system failures.
South Korean authorities have prepared a minimum of $2.28 million and a maximum of $1,520 for Korean virtual currency exchanges that acquire accounts from banks since September to compensate users for losses in the event of accidents such as hacking. I’m asking you to set money.
— Wu Blockchain (@WuBlockchain) August 28, 2023
The guidelines stipulate that exchanges should accumulate KRW 3 billion or 30% of the average daily deposit amount, depending on which amount is more important. However, there are definite limitations. When 30% of the average daily deposit amount exceeds 20 billion won, the exchange can only accumulate up to that amount.
Big Exchanges Adapt As Smaller Platforms Overcome Challenges
Upbit and Bithumb are coordinating their operations in the Korean cryptocurrency market to comply with these requirements.Upbit Officials Confirmed Compliance with the guidelines of the Federation of Banks of Korea. Bithumb is also making changes to meet the new standard.
However, smaller trading platforms, especially those focused on coin-to-coin trading, face a more complex picture. Many of these platforms have capital limits, making accumulating the necessary reserves a major challenge. Ongoing talks with banks to issue real-name accounts may currently be unclear.
In addition, the Federation of Banks of Korea expanded its regulatory scope.of guidelines It also touches on standards such as enhanced customer authentication (KYC) and additional measures for transfer authorization. Most of these guidelines are set for January 2024 entry into force, but the Reserve Directive has priority for September entry into force.
The Financial Services Commission’s Financial Intelligence Unit (FIU) is also playing a role in this regulatory change. They are drafting the Standards for Issuing Real-Name Bank Accounts to ensure they are consistent with banking sector guidelines. With these standards, the existing exchanges in the “won” currency market are expected to integrate them promptly.
Coin Market Exchanges: A Rocky Road Ahead
As the deadline approaches, existing exchanges in the won currency market are gearing up. However, the coin market exchanges, which primarily deal with transactions between coins, have a difficult road ahead.Introduction of Revised Specified Financial Information activity Won and coin trading will not be supported in 2021, impacting trading volume.
For these platforms, collecting 3 billion won is a daunting task. This requirement creates confusion in the preliminary process. Ongoing talks with banks to issue real-name accounts are also at risk, especially if they fail to meet minimum standards in the banking sector.
Industry insiders provided insight into the situation, suggesting that Hanbitco, which recently secured real-name accounts, may be one of the last few companies to secure real-name accounts under the current circumstances.
The essence of these changes rests on ensuring that cryptocurrency exchanges take place. South Korea We work with transparency, accountability and accountability. Key players may adapt relatively quickly, while smaller companies face a period of adaptation, learning, and potential transformation.
Furthermore, South Korea’s cautious approach to cryptocurrency regulation is a testament to South Korea’s commitment to investor protection and financial stability. As these regulations roll out, they will likely set a precedent nationally and potentially globally.