South Korean cryptocurrency exchange, Daybit, is now shutting all its local operations while citing harsh requirements for anti-money laundering laws. The exchange, which is getting operated by the Chain Partners, is now planning to terminate its entire operation on June 1.
According to the crypto exchange operator, the operation of Daybit is going to be halted in multiple phases by the 1st of June, as they are unable to provide the normal transaction services in this tough regulatory environment. It is coming into play after the Act on Reporting and Using Specified Financial Transaction Information came into force recently.
Daybit is not the first or the last Korean Crypto exchange to shut. Earlier this month, OKEx also opted for closing its South Korean operations due to many difficulties in regulatory and business aspects. CPDAX is another such kind of exchange in the country, which is also deciding for the shutting of its door for all such similar reasons.
Though the big four crypto exchanges in the county, Korbit, Upbit, Coinone, and Bithumb, are flourishing. On the other hand, the smaller ones are still struggling mostly to find their banking partners.
According to an anonymous insider, there are more than 10 exchanges that have completed their information security management systems. There is one requirement for the exchanges, which includes registering along with the Financial Intelligence Unit. However, they are having difficulties in getting more real-name accounts from the local banks.
Daybit’s banking’s partnering contract with Shinhan Bank is about to end before June. The insider also added that with more than 100 exchanges, they are very likely going to see many more closures.
South Korea opted for revising its laws on financial transactions reporting. It is mandating that all crypto accounts be linked with bank accounts in the real names of the holders. It should be completed before the deadline of September 24. However, the lenders find this screening process much difficult.
“When the crypto market is bullish, partnering up with crypto exchanges might look like good business but at the moment, especially when markets fluctuate like recently, the risks seem to outweigh the small transaction fees that banks could earn from the partnership,” a South Korean bank official said.