South Africa’s largest crypto exchange has also become the country’s first to apply for a license by filing the virtual asset business report to legitimize their crypto trading operations.
Becoming FSC-Approved Crypto Exchange
The crypto exchange applied for the license soon after acquiring a new bank account with K-Bank. This will allow deposits and withdrawals in Korean fiat currency (KRW) at the exchange. According to an official from Dunamu, which is the operator of Upbit,
“We filed a virtual asset business report with the Financial Intelligence Service.”
The country’s Special Act dictates that all crypto businesses need to meet all requirements of real-name verification, confirmation of deposit and withdrawal account issuance, and an Information Security Management System (ISMS) certification to conduct crypto trading activities in South Korea.
To accomplish that, the organization must submit a report covering all the information with the Financial Intelligence Unit (FIU), which serves under the Financial Services Commission (FSC). Following the report submission, it is reviewed by the Financial Supervisory Service. The firm is notified of its status by the FIU within the next three months.
Other Exchanges Also Eyeing FSC License
According to the FIU, Upbit has submitted its application and the report following all these requirements. Reportedly, this move has encouraged other crypto exchanges to follow suit. Doh Gyu-sang, Vice Chairman, FSC, talked about this matter at the National Assembly’s Political Affairs Committee meeting, saying,
“It is expected that one or two cryptocurrency exchanges will report to the authorities [as virtual asset operators] within August.”
Crypto exchange, Bithumb, which has partnered with Nonghyup Bank, and Coinone, which has partnered with Shinhan Bank for deposit and withdrawal accounts in real-name, could be next in line to submit their application for the license.
Regulations Might Land Smaller Exchanges In Hot Water
With the increasing oversight on the industry in South Korea, small and mid-size crypto exchanges have been hit hard. To ensure that business does not shut down for these exchanges, the deadline to obtain an FSC license has been pushed till September 24, 2021, since none of them have made progress in meeting the requirements.
DooWanNam, the co-founder of StableNode and Asia BD at DeFi protocol MakerDAO, commented that the government is considering several leeways to allow for the continued functioning of these exchanges and avoid chaos. Authorities are relaxing security and KYC requirements to enable the exchanges to operate without a banking account.
DooWanNam also said,
“The government is relaxing the requirements and allowing many to continue to operate. Overall, the government doesn’t want to be blamed for shutting them down, especially when it’s a politically sensitive period.”