Regulations in South Korea have placed crypto exchanges in the country in jeopardy. Exchanges are finding it difficult to conduct business, and reports suggest that most of the exchanges in the country are on the verge of bankruptcy.
Business Korea reports that low transaction volumes have placed Korea’s crypto exchanges in a serious predicament.
Most of the exchanges in the country, about 97% according to the report, are close to going bankrupt and only five exchanges from the country are considered in the top 100 of online crypto exchanges worldwide.
South Korea crypto environment
There are a variety of factors which may be affecting the operations of crypto exchanges in South Korea. Regulatory policies in the country do not allow investors to withdraw their funds in fiat currency from Korean exchanges.
Over 200 small scale exchanges have been unable to open real name virtual accounts which makes it difficult for these exchanges to engage in business.
Banks in South Korea are not welcoming to crypto related businesses. New anti money laundering (AML) laws in the country have made it difficult for exchanges who previously has bank accounts to renew their contracts with their banks.
At least four exchanges have faced challenges when they are trying to renew their bank accounts.
Regulations in the country are becoming increasingly difficult to navigate for exchanges and smaller exchanges are particularly suffering as a result.
These exchanges are being asked to suspend some existing accounts on their platform and stop opening new accounts. This will affect their revenue and they may have to shut shop eventually.
Exchanges looking at moving their business
Crypto exchanges in South Korea are considering their options as far as moving their operations to crypto friendly countries goes.
These exchanges need to love their business in order to escape the harsh conditions in South Korea and save their companies from bankruptcy.
The number of Korean companies listing their blockchain projects on overseas exchanges has increased lately. Crypto industry players such as BW.com and Binance Labs are offering these firms opportunities to list on their exchanges.
Storichain, Sigma Chain, Ziktalk and Payexpress have already been listed on BW.com.
Crypto battle with regulations
Regulatory policies are one of the factors holding cryptocurrency back from its bid to achieve mainstream adoption. There are many countries in which digital assets are continually fighting regulations to survive daily.
South Korea has proven to be a tough environment for crypto exchanges and many have resorted to registering overseas. South Korea will lose an industry that has a lot of potential to generate high revenue.