The South Korean arm of the cryptocurrency exchange OKEx has decided to shut up shop rather than attempt to navigate revised regulatory hurdles that come into effect on Thursday.
A spokesperson of the exchange told CoinDesk Korea the local currency market would become too difficult to navigate due to new anti-money laundering (AML) safeguards for cryptocurrency businesses.
“In addition to several other factors, actual profits from our Korean operation don’t add up to much, so we decided to cut our losses,” said the spokesperson.
Under the revised Financial Transaction Reports Act, virtual asset service providers (VASPs) must undergo compliance inspections and verify customer identities – something the exchange said it is unwilling to do in this case, according to the report.
The legislation also stipulates that the providers are required to file suspicious transaction reports to the Korea Financial Intelligence Unit and are answerable to the Financial Services Commission (FCS).
The new legislation provides a six-month grace period to firms engaging in services related to cryptocurrency.
“Up until now we’ve provided most of our services with fiat on-ramps, but forming a bank partnership (for real-name accounts) is realistically out of reach,” said the spokesperson.
In November 2020, the FSC began undergoing legal amendments to legislation that made it mandatory for VASPS within the country to report the names of their customers.
The move is in line with intergovernmental money-laundering watchdog the Financial Action Task Force and its request to its over 200 member nations to help them prevent money laundering.
CoinDesk Korea reporters Inseon Chung and Felix Lim assisted in the translation from Korean to English.
OKEx Korea previously announced on March 18 it would cease operating in the local currency market until March 25 when the revised legislation comes into effect. It has since only been operating markets in bitcoin, ether and tether.