South Korea’s Largest Crypto Exchange Upbit Become the First to Apply for a License After Securing a Bank Account

Leading South Korean cryptocurrency exchange Upbit has become the first to apply for a license in the country, reported a local publication. The exchange also secured a bank account with K-Bank allowing it to officially accept Korean fiat (KRW) deposits and withdrawals.

The Financial Intelligence Unit (FIU) under the Financial Services Commission said Upbit submitted a report in accordance with the Special Act on its website. According to the Special Act, cryptocurrency businesses must meet the requirements, including real-name verification deposit and withdrawal account issuance confirmation and an Information Security Management System (ISMS) certification.

“We filed a virtual asset business report with the Financial Intelligence Service,” said an official from Dunamu, the operator of Upbit.

Once a report has been submitted with the FIU, the Financial Supervisory Service reviews the reporting requirements, and within a maximum of 3 months, the FIU notifies whether a firm is accepted or not.

Upbit’s move has other exchanges following its footsteps with Doh Gyu-sang, vice chairman of the Financial Services Commission at the National Assembly's Political Affairs Committee meeting saying, “It is expected that one or two cryptocurrency exchanges will report to the authorities (as virtual asset operators) within August.”

Bithumb and Coinone, which have a banking partnership with Nonghyup Bank, and Coinone, which has partnered with Shinhan Bank for deposit and withdrawal accounts in real-name, could be next in line.

According to the financial authorities, there are currently 61 cryptocurrency exchanges in operation in South Korea, with 20 companies having obtained ISMS and 22 companies that are subject to ISMS screening.

Amidst this also came the report that the financial services regulator is planning to shut down about 11 cryptocurrency exchanges for being engaged in illegal activities and using fraudulent collective bank accounts.

According to local reports, the regulator plans to deny these unnamed exchanges the approval to serve the South Korean market.

Over the past year, the watchdog has stepped up its oversight of the industry, whose effect was mostly seen on small and mid-sized exchanges.

South Korean exchanges actually have until September 24 to meet all the FSC requirements and obtain a license from the regulator. DooWanNam, co-founder of StableNode and Asia BD at DeFi protocol MakerDAO said,

“The Korean government is shocked at how so few Korean exchanges are ready for the license…Technically, none is ready, and of course, the government doesn't want to shut them all down and create chaos, so creating several leeways.”

The leeways are regarding security and KYC requirements allowing the exchanges to continue to operate despite not having a banking account.

“The government is relaxing the requirements and allowing many to continue to operate. Overall, the government doesn't want to be blamed for shutting them down, especially when it's a politically sensitive period.”

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