The top financial regulator in South Korea  will shut down 11 cryptocurrency exchanges that were allegedly engaged in fraudulent bank account schemes, according to local media. Meanwhile, the deadline for all crypto exchanges to comply with the country's regulation is nearing, and the majority of them have not been able to meet the requirements.

11 Cryptocurrency Exchanges Could Be Shut Down

The Financial Services Commission (FSC), South Korea's top financial regulator, is reportedly planning to shut down 11 cryptocurrency exchanges, according to unnamed industry sources, the Korea Herald reported on Monday.

The 11 crypto exchanges are alleged to have used fraudulent collective bank accounts, and the FSC intends to notify prosecution and police of the alleged illegal activities, the sources added, I t should be noted that the exchanges will be unable to obtain approvals from the FSC in order to maintain their business. The exchanges' names have not been revealed.

Crypto exchanges must acquire approval from the FSC by September 24 in order to continue functioning. Some attempts to offer exchanges more time to comply with requirements, including as People Power Party Congresswoman Cho Myeong's proposal that the deadline be extended until December 24, were turned down. The FSC claims that crypto exchanges have been given a six-month grace period and is sticking to its September 24 deadline.

One of the requirements is that crypto exchanges must work with local banks to open real-name accounts for customers. Banks, on the other hand, have been hesitant to deal with exchanges besides the top four, which are Bithumb, Upbit, Coinone, and Korbit. Exchanges will have to shut down if they are unable to provide real-name accounts.

Several mid-sized exchanges have already announced plans to close or suspend operations, according to the journal, which also stated that Darlbit ceased operations on July 15. On July 30, CPDAX announced that it will discontinue operations on September 1, underlining that this is not a temporary but rather a permanent action to close the company. Those who have cryptocurrency in their accounts must withdraw them before August 31 at 3 p.m..”

The Information Security Management System must also issue a certificate to exchanges (ISMS). Many crypto exchanges in South Korea are also struggling to achieve the certification's requirements. According to the journal, Bitsonic exchange, for example, said on July 30 that it will temporarily cease offering services in order to modernise its service systems and meet ISMS criteria.

What are your thoughts on the FSC's decision to shut down 11 exchanges, with many more likely to follow suit due to their failure to comply with the impending regulation? Please share your thoughts in the comments box below.