Most Exchanges Expected to Be Shut down
It has been one month since the Act on Reporting and Using Specified Financial Transaction Information became effective so that money laundering can be prevented by cryptocurrency exchanges. However, every cryptocurrency exchange has yet to complete the related reporting procedures in relation to the financial authorities. The deadline is Sept. 24 and a lot of virtual currency exchanges may be shut down if they fail to do so by that date.
According to the act, a virtual asset operator can report itself to the authorities after meeting certain requirements, including a real-name deposit and withdrawal account provided by a bank and the Information Security Management System (ISMS) certification. The bank is supposed to determine whether the operator is capable of preventing money laundering.
At present, about 200 virtual asset operators are said to be in operation in South Korea. Most of them are unlikely to be able to meet the requirements. Non-registration by Sept. 24 and business continuation without registration are subject to up to five years in prison or a fine of up to 50 million won. In the event of shutdown, the exchange must return deposits and virtual currencies to users.