South Korean Gopax crypto exchange, which is funded by Digital Currency Group, is in danger of being shut down because of the country’s fast-approaching deadline for platforms to apply for an official operating license.
South Korean crypto exchange Gopax has told users if it can’t resolve its banking difficulties before a looming regulatory deadline it will need to shut down.
To be considered for a license, all crypto exchanges must show proof of using real-name accounts with South Korean banks.
The problem is that domestic banks have mostly declined to provide risk assessments for the country’s numerous small-medium-sized exchanges, opting instead to service the country’s major four trading platforms: Upbit, Bithumb, Korbit, and Coinone. The deadline for all licensing applications has been extended till September 24.
The Gopax team said in a note to users today, Sept. 17, that the exchange is “currently negotiating with a financial institution to establish a real-name verification deposit and withdrawal account,” as required by the new regulatory system.
The exchange will continue to operate its Korean won crypto trading services as usual until September 24, but if the negotiations fail to resolve the issue, Gopax has warned that users will receive a follow-up notice informing them of the end of support for won transactions, deposits, and withdrawals.
Non-Korean customers are forbidden from utilizing the country’s exchanges under the new legislation, therefore the platform has already stopped serving them.
The firm that runs Gopax is called Streami, and it was funded by Shinhan, one of South Korea’s largest commercial banks.
The exchange operator has been proactive in attempting to build the platform’s compliance credentials, striving to obtain ISO/IEC 27001 and K-ISMS certifications in 2017, respectively.
When legal and regulatory parameters, calibre of investment, quality of data provision, and trade surveillance are taken into account, CryptoCompare currently ranks Gopax as the best platform in the country.
According to experts, the new licensing restrictions will cause up to 40 of South Korea’s estimated 60 crypto exchange operators to close.
The Financial Services Commission, which is in charge of enforcing the new rules, has justified them by claiming that traders have shown a strong need for greater security for their funds kept on smaller cryptocurrency exchanges.
Banks have reacted angrily to the new regulations, claiming that they are being forced to indirectly vet the country’s exchanges by being responsible for issuing real-name accounts. This, according to one banking sector representative, is a “hazardous and costly endeavor” for financial institutions.