SEOUL, June 16 (Yonhap) — Cryptocurrency exchanges here are removing some coins from their trading platforms as they are bracing for tough regulations on digital currency transactions set to be introduced in September, inducing sharp falls in prices and irking investors, industry sources said Wednesday.
At least 11 of 20 certified cryptocurrency exchanges have decided to delist some altcoins — all cryptocurrencies other than Bitcoin — or place them on a warning list for investments since late May, according to the sources.
Upbit, the country’s largest cryptocurrency exchange by transaction, abruptly announced Friday it will start to suspend won-based trading of five types of altcoins a week later. It also put 25 minor virtual currencies on the warning list, which virtually means they will be removed from the trading platforms.
The move comes as the country will fully enforce a revised law in September that will require cryptocurrency exchanges to register with the financial regulator under strict requirements.
The law requires banks to issue real-name accounts under stricter guidelines to prevent money laundering. Banks will assess a cryptocurrency exchange’s transparency, business risks and the possibility of criminal activity.
South Korea is seeking to toughen its supervision on virtual money as the latest frenzy buying of cryptocurrencies has raised concerns about speculative investments and potential illegal activities amid a lack of proper regulations.
Currently, only the four biggest exchanges — Upbit, Bithumb, Coinone and Korbit — have real-name bank accounts issued by commercial banks.
Starting Sept. 25, minor cryptocurrency exchanges, estimated at around 100, will be banned from withdrawing money for cryptocurrency trading if they have no real-name bank accounts.
Local cryptocurrency exchanges apparently sought to “prune” minor cryptocurrencies to meet the financial regulator’s criteria. But the move has sparked high price swings, inviting backlash from investors and incurring losses for them.
As there is no legally regulated rules for virtual money, critics said cryptocurrency exchanges have made such a decision based on their own standards.
Following Upbit’s latest announcement, prices of most altcoins whose trading will be suspended nose-dived about 45 percent, with some digital currencies tumbling 70 percent.
Against this backdrop, the Financial Supervisory Service (FSS), the country’s financial watchdog, asked 20 local cryptocurrency exchanges Monday to report a list of cryptocurrencies on a daily basis that they’ve recently decided to delist or put on the watch list.
Market watchers said more minor exchanges may further suspend trading of such digital currencies ahead of the law enforcement, possibly putting investors in a risky spot.
Despite repeated warning from policymakers, Korean investors have been heavily buying virtual currency as they see it as a lucrative asset amid the pandemic.
More young people have been investing in cryptocurrencies, anticipating higher returns, with some saying they cannot buy houses solely with their income amid skyrocketing home prices.
Separately, South Korea plans to impose a 20 percent tax on capital gains from cryptocurrency transactions next year as scheduled, despite investors’ calls for delaying the taxation plan.
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