South Korea’s Registration Deadline for Crypto Exchanges Could Erase $2.6B in Assets: FT

The shutdown of two-thirds of the country’s smaller exchanges could also eliminate 42 so-called kimchi coins, according to one expert.

AccessTimeIconSep 13, 2021 at 6:39 p.m. UTC
Updated May 11, 2023 at 3:34 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Around $2.6 billion worth of digital assets could be wiped out when South Korea’s deadline for crypto exchange registration rolls around on Sept. 24, the Financial Times reported Sunday.

South Korea’s Financial Transaction Reports Act is requiring all crypto exchanges to register with the Financial Services Commission (FSC) by the end of the month. To comply with the country’s anti-money laundering and know-your-customer procedures, crypto exchanges need to register with local banks and set up real-name accounts for their customers.

The FSC has advised exchanges that are unable to meet regulatory obligations must inform their customers of any potential closure by Sept. 17.

Around two-thirds or 40 exchanges out of 60 have yet to register, according to the report, with experts saying it could create a “bank run” scenario. A bank run occurs when the majority of customers attempt to withdraw their money fearing the institution will cease to exist.

In some extreme cases, financial institutions’ reserves have failed to cover the cost of customer withdrawals, and experts are warning the same for smaller crypto exchanges in the country could occur.

“A situation similar to a bank run is expected near the deadline as investors can’t cash out of their holdings of alt-coins listed only on small exchanges,” said Lee Chul-yi, head of medium-sized exchange Foblgate. “They will find themselves suddenly poor. I wonder if regulators can handle the side effects.”

The Financial Times cites industry data and points out that roughly 90% of South Korean crypto trading is conducted in altcoins, some of which are known as “Kimchi coins.” Kimchi coins are tokens primarily developed by Koreans.

Around 42 Kimchi coins are expected to disappear, according to estimates by Kim Hyoung-joong, head of the Cryptocurrency Research Center at Korea University.

Another expert cited in the report, Cho Yeon-haeng, president of Korea Finance Consumer Federation, said that “huge investor losses are expected” as trading is suspended and assets are frozen. Many of the smaller exchanges are unlikely to offer customer protection as they stare down immediate closure, he said.

On Tuesday, Bitfront, a crypto exchange subsidiary of Japanese tech giant LINE, is expected to cease providing a Korean-language service and halt payments with South Korean credit cards as it seeks to appease regulators and cut ties with the country.

Last month, Binance halted trading pairs and payment options using the South Korean won, intending to proactively comply with local regulations.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Sebastian Sinclair

Sebastian Sinclair is a CoinDesk news reporter based in Australia.

Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now.