OKEx Korea to Shut Down In Two Weeks; New AML Laws Coming Into Effect for VASPs
OKEX Korea is closing its doors to investors in the country on April 7, 2021. The upcoming VASP laws could be the reason the exchange is shutting down its operations.
In a notice on their blog, global cryptocurrency exchange, OKEx, announced they would be shutting down its Korean branch's operations in the next two weeks. Users with assets on the platform must withdraw them before 16.00 GMT on the given date.
“OKEx Korea service has ended on April 7th,” the statement reads. “We would like to thank all of our customers who have used OKEx Korea in the meantime.”
According to local reports, the company is shutting down instead of complying with the upcoming laws governing crypto service providers that come to effect on March 25. According to a spokesperson, the exchange finds it too difficult to navigate the set Know-Your-Customer (KYC) and Anti-money Laundering (AML) rules in Korea.
“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,” the spokesperson added.
The revised laws on VASPs, the Financial Transaction Reports Act, stipulates that VASPs are required to provide information on any suspicious transactions to the Korea Financial Intelligence Unit and report these activities to the Financial Services Commission (FCS).
Additionally, the crypto service providers must verify and store the user's KYC information and undergo compliance inspections and audits, similar to other financial firms. Finally, VASPs are required to set up “real-name verification for deposits and withdrawals with a regulated Korean bank.”
The new rules also force VASPs to apply for certifications with the Information Security Management Systems – something OKEx Korea struggled with. Speaking to The Block, a representative said,
“We struggled to get ISMS [Information Security Management System certificate] and virtual account [bank account required to get licensed]. As a joint venture company with OKEx.com, it was hard to decide, but we had no other option.”