If they fail to meet a regulatory deadline in September and are forced to close. South Korean crypto exchanges are preparing to sue the government or challenge it in the constitutional court.
New crypto exchange regulations, which have already been enacted into law, will take effect on September 24. However, none of the country’s 60 active crypto exchanges have yet to meet the stringent requirements for operating licenses.
Even the country’s “big four” exchanges – Upbit, Korbit, Bithumb, and Coinone – are still working on securing the necessary banking deals. While the Financial Services Commission (FSC) plans to conduct spot checks at all 60 South Korean trading platforms.
While exchanges hope that the FSC and the government will soften their stances as the deadline approaches. Anger in the crypto sector is growing, with a grim acceptance. That “most exchanges” will still close on September 24 unless the government backs down.
The chasing pack of larger non-big four exchanges
Although the exchanges are currently attempting to persuade the government. And the FSC to change their minds about the severity of regulations. Through direct appeals, media outlets have suggested. That if they are “forced to close,” they will not do so quietly. And will be prepared to fight for their survival in court, claiming unfair treatment.
Meanwhile, South Korean banks have thrown another spanner in the works for the government. Stating that they do not want to be held liable for crypto exchange risk assessments.
Banks have been instructed to conduct risk assessments on trading platforms in order to determine whether exchanges. And their senior management is suitable clients for business partnerships. Exchanges will be unable to conduct anonymity-free, real-name banking without banking contracts. Furthermore, the government has stated that exchanges that do not have banking partners will be forced to shut down.
Banks have the authority to act as Judges, Juries and Executioners
As a result, banks now have the authority to act as judges, juries, and executioners in the financial sector. The problem is that they appear to be unwilling to take on this responsibility. And are urging regulators to shoulder some of the blame in the event of a hack or allegations of fraud.
Commercial banks “have requested that they not be held accountable,” according to the Seoul Shinmun. Even if money laundering occurs at an exchange.
The government and senior financial sector leaders are also unsure. Whether they should continue to build a strict cryptocurrency licensing system that could “shrink the market,”. Or do the opposite, introducing “loose standards that could encourage speculation,” according to the media outlet.
The authors of the report concluded that in the political world. Opinions are now “divided over the regulatory methods” outlined in the new law. And that the proposed exchange registration system and banking protocols may be causing concern.