South Korean Crypto Exchanges Now Required to Hold 3 Billion Won in Reserve Accounts

2023/08/29 23:00

South Korean cryptocurrency exchanges are obligated to allocate a minimum of 3 billion won, roughly $2.3 million, in bank reserves.

These regulations, effective from September, follow the "Virtual Asset Real-Name Account Operation Guidelines" outlined by the Korea Federation of Banks (KFB) earlier this year.

The directive pertains to exchanges that possess verified accounts from local banks and mandates the set-aside of 30% of daily average deposits or at least 3 billion won, with an upper cap of 20 billion won, as stipulated by the guidelines.

Real-name accounts, in this context, refer to clients who have undergone KYC procedures and share the same name across the bank and exchange.

While established exchanges like Upbit and Bithumb, renowned for high trading volumes, are expected to easily adapt to these measures, smaller trading platforms, especially those confined to coin-only markets or lacking crypto-to-fiat pairs, might face challenges.

Smaller exchanges, which currently do not possess bank accounts and thus are exempt from accumulating reserves, are caught in a predicament.

Some have initiated talks with banks to secure accounts in order to remain viable in the market and to comply with the Specific Financial Information Act, introduced in 2021.

The KFB's operational directives encompass various other standards, including enhanced customer authentication (KYC), scheduled for implementation in January 2024.

Robust Crypto Regulations for South Korea

Separately, South Korea's Financial Services Commission (FSC) revealed plans for new rules, slated to take effect in January 2024.

These regulations will necessitate local firms issuing or holding cryptocurrencies to disclose a range of information, covering token quantity, attributes, business models, and internal accounting strategies related to cryptocurrency sales and profits.

Digital Won

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Robust Crypto Regulations for South Korea

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