- South Korean exchanges are running dangerously close to bankruptcy
- Only five South Korean exchanges feature in the world’s top 100
- Strict regulations and guidelines are to blame for it
According to October 14, 2019, report published by ZeroHedge, close to 97 percent of South Korean cryptocurrency exchanges are on the verge of going bankrupt.
South Korean Exchanges Suffocating Under Stringent Regulations
As a result of the strict imposition of regulations and guidelines by South Korean regulators, the country’s digital currency exchanges are left reeling for liquidity as their profit margins run thinner and thinner.
Per sources close to the matter, stringent regulations have forced South Korean crypto curious to move their digital holdings overseas in foreign exchanges. This shift of digital capital can fatally disrupt the business models of Seoul-based exchanges, the report reads.
It’s worth noting that it’s not only the cryptocurrency investors but also new blockchain startups that are getting increasingly warmer toward foreign exchanges compared to domestic ones. Seeing the gradual shift of South Korean investors toward overseas exchanges, a number of international exchanges have introduced support for South Korean won for crypto to fiat transactions while at the same time preserving the identity of the user.
Notably, one of the biggest cryptocurrency exchanges by reported trading volume, Binance, has added the South Korean won feature to its arsenal to attract digital currency aficionados from the peninsular country.
Two South Korean crypto projects – Medibloc and Temco – are expected to get listed on foreign exchanges, the report adds. Reportedly, the primary reason why the domestic exchanges have had to face such grim market conditions is that the smaller exchanges cannot open real-name virtual accounts, which means, traders do not get to convert their digital holdings into fiat, or won.
South Korea No Longer the Crypto Haven?
As a result of the drying crypto business, today, only five South Korean exchanges feature among the top 100 global exchanges in terms of transaction volume.
South Korean media publication Business Korea warns:
“It is no exaggeration to say that 97 percent of domestic exchanges are in danger of going bankrupt due to their low volume of transactions.”
That said, it seems that the house of cards has already started to falter. Prixbit, a major South Korean cryptocurrency exchange has stated that it would cease its operations from August 2019. The exchange’s founder stated:
“Due to negative internal and external influences, management difficulties could not be overcome and the normal operation became impossible.”
