Will the Korean virtual asset market shrink due to the "Special Gold Act" that is difficult for exchanges to meet?
Foreword:
Foreword:"This article discusses the "Special Gold Act", which is also difficult for large Korean exchanges to meet the standards, and the foreign exchanges."cut off korea
What kind of impact will the behavior have on the domestic virtual asset market in South Korea. (This article has a total of 2806 characters, and the reading time is about 6 minutes.) This week, South Korea finally appeared the first exchange to declare its business under the Specified Financial Information Act (Special Fund Act). As everyone expected, the first exchange to declare is Upbit, the largest exchange in South Korea. Upbit submitted an application to the Financial Information Analysis Institute (FIU) on the evening of August 20. The financial authority will review and decide whether to accept the application.
Things are not looking good for domestic exchanges in South Korea. On August 16, the South Korean government announced the results of the Financial Commission’s consultation on exchanges, and stated that none of the exchanges met the reporting conditions of the “Special Gold Act”. Not only small and medium exchanges, but even the four major exchanges (Upbit, Bithumb, Coinone, Korbit) failed to meet the standards."While domestic exchanges in Korea were unable to develop their businesses stably, foreign exchanges began to"cut off korea
. Following Binance last week, other exchanges such as Bitchfront have also begun to stop Korean service and cancel Korean won settlement this week.
Although this is a change in the business of the exchange, it will affect the entire Korean domestic virtual asset market in the long run. It is more difficult for blockchain companies that have already issued coins to be listed on domestic exchanges in South Korea, and domestic investors in South Korea may also lose confidence due to fewer investment options. Large exchanges also have difficulty complying with the Special Fund Act On August 16, the government concluded that readiness for the implementation of the Special Fund Act was generally not satisfactory. From June to July this year, the Financial Commission conducted on-site consultations with virtual asset operators. From the perspective of consultation, none of the companies met the declaration requirements, and the Financial Commission required operators to make up for the deficiency.
The two exchanges have extended their real-name account contracts with NH Nonghyup Bank to September 24, the deadline for business reporting under the Special Gold Act. At present, Nonghyup Bank will start implementing it next year."travel rules"travel rules
For the reason, the exchange is required to stop the deposit and withdrawal of virtual assets. Blocking access to virtual assets could lead to excessive price premiums on exchanges and could leave them vulnerable to market price manipulation. So, from an exchange's point of view, it's an unacceptable requirement. However, the key to ignoring the request is to negotiate with Nonghyup Bank’s real-name account. This background also has a certain degree of influence on the reason why the two exchanges cannot easily carry out business declarations. The same is true for the large exchanges known as the four major exchanges. What about the situation of small and medium-sized exchanges? Of course, business reporting is very difficult. For this reason, the National Assembly has also proposed amendments to the Special Fund Act that ease the reporting requirements."Foreign exchanges do not comply with the "Special Gold Act", enter"cut off korea"At this stage, the "Special Gold Act" that is difficult for large domestic exchanges to comply with, the possibility of compliance by foreign exchanges is almost zero. The Special Fund Act stipulates that if a foreign exchange is operating for Koreans, it must meet the same requirements and report to the domestic financial authority. The probability of foreign exchanges meeting the conditions such as ISMS or real-name accounts and reporting is very low. Not long ago, South Korean financial authorities sent 27 foreign exchanges that support Korean services with the content"to comply with special gold law
warning text. In response, Binance, the world's largest exchange, decided to suspend Korean language services and Korean won trading. This week, Bitfront, an exchange established by Naver’s company Line, decided to suspend Korean language services and Korean credit card settlement services in accordance with the Special Gold Act, as did FTX, a large derivatives exchange. It is foreseeable that domestic virtual asset investors in South Korea will have significantly reduced choices of exchanges. There are only a handful of domestic exchanges left in Korea. If the Korean language pages of foreign exchanges cannot be used, there will be only a handful of exchanges that can be used normally.
Stricter regulations raise chances of shrinking South Korean market"So, how will such a restrictive environment affect the Korean virtual asset market? In fact, restricting exchanges is also a global trend. The most typical example is Binance. Not only South Korea, but also European countries such as the United Kingdom and Spain and Malaysia have also issued warnings to Binance. Therefore, Binance not only suspended some services for users in South Korea, but also suspended some services for users in other regions such as Malaysia and Hong Kong. However, it was pointed out that in South Korea, the impact of service outages on foreign exchanges was particularly severe. Entrepreneur Hoon-Jong Baek said, “Unlike active OTC (over-the-counter) platforms and P2P (person-to-person) trading platforms abroad, the Korean domestic market is still concentrated in general centralized exchanges. The Korean domestic market may be affected. A bigger blow." He noted that investment sentiment may weaken for South Korean investors who are used to using general exchanges instead of OTC or P2P. At the same time, it is expected that there will be only a few domestic exchanges in Korea. The fate of the remaining exchanges also depends on the banks that issue real-name accounts. At this time, there is a big problem, that is, the number of listed tokens is considered one of the criteria for banks to evaluate exchanges. The bank believes that the greater the number of virtual assets listed, the higher the risk of the exchange. Therefore, at present, Korean domestic exchanges can only maximize"few
List token projects. It has also been predicted that major exchanges will not list South Korean token projects for some time, as tokens from domestic companies are vulnerable to surveillance by financial authorities. If this situation continues, South Korean blockchain companies with their own virtual assets may be greatly affected. In the past, the standardized promotion route for issuing virtual asset companies was to list their own tokens on large domestic exchanges in Korea and enter foreign exchanges, but now other solutions may be required.
Listing on large domestic exchanges has become very difficult. Even if the channels are changed and listed on foreign exchanges first, it will be difficult to attract the attention of domestic investors. Because foreign exchanges are suspending services targeting domestic investors in Korea. Combining these factors, South Korea’s domestic virtual asset market may shrink across the board. This is because investors’ investment sentiment may cool down, and Korean virtual asset issuing companies may also experience difficulties in conducting business."imported from Japan"white list
May have a negative impact on market development"Some predict that if this situation continues, South Korea will also develop a regulatory environment similar to that of Japan. Japan has a complete "white list" system, only government-licensed exchanges can operate, and only government-approved tokens can be traded. However, in Japan, due to strict regulations, the volume of virtual asset transactions has decreased and the market has shrunk. In this regard, some people pointed out that the scale of funds in the investment market is not as large as that of Japan, and South Korea may be more affected. In other words, if the number of virtual asset operators is greatly reduced due to the "Special Gold Act", it will have a certain impact on the market anyway. Hoon-Jong Baek Prediction:"，"If South Korea implements a 'white list' system, the virtual asset market may shrink even more."
Conclusion:
Conclusion:
It is less than a month before the "Special Gold Act" comes into effect on September 24. The development of the virtual asset industry in South Korea has been the most concerned issue recently. It was revealed that there is currently no exchange that fully meets the requirements for obtaining a license, which really makes people sweat for Korean investors.
