After much regulatory rumbling and chaos, crypto-investors in South Korea now have a better idea of where they may need to go in order to continue trading.
However, according to local news reports, one crypto-exchange may now control the majority of the market.
A new ‘opportunity’ has arisen.
Upbit and Korbit’s reports on their KYC processes appear to have been “accepted” by South Korean regulators. Despite this, 27 other crypto-exchanges and 13 operators are still being investigated.
Nonetheless, among the top exchanges, a new winner may emerge. According to a translation of the news report,
“In the process of implementing the reporting system, both inside and outside the cryptocurrency industry believe that Upbit’s monopoly system has grown significantly stronger.”
Furthermore, based on transaction sizes, the report claimed that Upbit’s market share could exceed 80%.
Is the battle declared ‘won?’
South Korean regulators have set a deadline of September 24, 2021 to verify users’ identities. Crypto-operators were required to provide an information security management system, as well as user bank account information, by this date. Many people feared that a slew of small exchanges would go down.
Bithumb and Coinone, which allegedly submitted documentation, are able to conduct transactions involving the restricted Korean won [KRW]. They are also gathering user identification information and authenticating bank information for the same purpose.
According to another translation of the news report,
“The remaining 25 sites abandoned won-denominated transactions in favor of a coin market that only allows coin-to-coin transactions.” “Of the 66 exchanges identified at the start of the year, 37 have closed or discontinued operations as a result of the reporting system.”
South Korea’s cryptocurrency market is well-known for its kimchi premium – the difference in the price of coins on Korean exchanges versus those in other countries. Many short-term traders have used the same strategy to make quick profits. Furthermore, South Korea is known for having a diverse altcoin scene, including a number of “kimchi coins.”
Even prior to the crackdown, Upbit was tightening its KYC requirements and halting more than 20 flagged tokens.
Caught in a bind
With regulators now regulating crypto-exchanges and operators, investors in the region may be wondering about crypto-taxes.
From 2022, the ruling administration intends to levy a 20% tax on cryptocurrency gains exceeding 2.5 million Korean won [$2,100]. Opposition policymakers, on the other hand, want to postpone the deadline and define virtual currencies more broadly.