Crypto Exchange Bithumb Gets South Korea Regulatory Approval

In the past few years it has turned to the cryptocurrency world to generate revenue, mostly by stealing it. The new Korean legislation has made AML/CTF requirements mandatory for a wide range of virtual asset service providers. This step creates a safer economic environment, with financial regulators finally gaining access to data regarding crypto transactions. To avoid sanctions, crypto businesses must be fully compliant with the new law.

The Korean won is third to the U.S. dollar and the euro in a ranking of currencies used for crypto trading, according to the report. Japan, another nation where cryptocurrency trading is popular, has a similar story. “For young Koreans, cryptocurrency seems like a rare shot at prosperity,” an article on the online publication The Verge states. The same article quotes a 20-something journalist who opines that cryptocurrency investments are also a means for a largely homogenous and well-educated workforce to distinguish themselves from peers.
The country’s other three major exchanges — Upbit, Coinone and Korbit — had already been accepted under the FIU, while a decision on Bithumb’s business report had been postponed, some 75 days after the report was submitted. Some media reports attributed that to the ongoing trial of Bithumb’s major shareholder Lee Jung-hoon, after he was indicted with fraud charges. The crux has been the obligation that all exchanges show evidence that they are operating using real-name accounts at South Korean banks. The FSC has justified by arguing that there is a high demand from customers for more protection for their assets held at smaller crypto platforms. Yet South Korea’s banks have, for the most part, refused to engage in any risk assessment process for applicant exchanges, except for the country’s top four trading platforms.

South Korea Moves To Regulate Domestic Bitcoin Trading, Exchanges

The findings come after a South Korean cryptocurrency exchange appears set to file for bankruptcy after it was hacked for the second time this year, highlighting concerns about security amid booming trade in bitcoin and other virtual currencies. Unfortunately, most overseas cryptocurrency exchanges like Kraken, Binance, and Coinbase are blocked by local Korean banks. You may be able to wire transfer funds to/from Korean banks, but it is highly unlikely as most local Korean banks are cracking down on overseas cryptocurrency exchanges. On March 11th, 2021, Korea JoongAng Daily published the article, “Bitcoin exchanges to be subject to heavy fines by FSS”, in which cryptocurrency exchanges are under scrutiny. They also added that in addition to the 20% tax mentioned above, there will be a 50% inheritance tax imposed on any cryptocurrency assets. South Korea’s Bithumb exchange has been officially registered under the Financial Intelligence Unit . This makes all four major exchanges of the country licensed to operate virtual assets including cash-to-crypto services. Upbit is one of South Korea’s largest cryptocurrency exchanges alongside Bithumb, Coinone and Korbit, making up more than 80% of the local cryptocurrency market.
bitcoin exchange korea
Industry experts have estimated that at least fifty exchanges will close down, or reduce service offerings, due to them not meeting all of the requirements. Out of the 28, only four crypto exchanges have fulfilled the requirements to process cash to crypto services. The remaining 24 acquired only the ISMS certification and not the banking partnership. In September 2017, the country’s Financial Services Commission ordered a ban on Initial Coin Offerings . If the plan is implemented, South Korea will become one of the few countries to tax cryptocurrency-to-cash exchanges. Since late November 2017, South Korea has looked to regulate cryptocurrency trading in domestic exchanges, including Bithumb, Coinone and Korbit, The Korea Herald reports. Now, trying to tame the wave of wild cryptocurrency speculation in the country, South Korea is imposing trade bans for minors and looking for ways to impose taxes on investment returns.

South Korea Allows Cryptocurrency Trading For Real

Jason Cho, an adviser at Bitcoin Center Korea, says young people are “in a system where the door is constantly being shut on them, and the benefits of this society are going to the very few at the top.” Cryptocurrency, for some, is a way out. In this highly educated economy, it can be hard for young Koreans to distinguish themselves from their peers. Nearly 70 percent of all Koreans ages 25–34 have a post-secondary degree, the highest of all Organisation for Economic Co-operation and Development countries, and a high school degree is nearly universal. Entire neighborhoods in Seoul are full of college graduates studying to pass hiring exams in order to get in at Korea’s biggest companies or the enviable public sector.

  • They make it difficult to determine when money is actually changing hands and when it is just being moved to another address the money launderer controls, he says.
  • The kimchi premium is predominantly seen in the price of the cryptocurrency Bitcoin .
  • In a week after initial AML restrictions, Upbit plans to place more limits for unverified users.

Four companies — Gopax, Gdac, Hanbitco, and Huobi Korea — said they are still working to secure banking partnerships by the deadline. According to The Korea Times, the approval of Bithumb as a virtual asset provider is a big win in Korea’s cryptocurrency sector. Bithumb will become one of the latest leading cryptocurrency exchanges in South Korea. Almost $500 million was stolen from a Japanese exchange called Coincheck Buy ETH back in January. And although South Korea’s Coinrail is a relatively small exchange, people are still trading on fears that the cryptocurrency system is inherently susceptible to intrusion. Coinrail, for whatever its worth, says that it keeps 70 percent of its cryptocurrency on devices that aren’t connected to the internet in what’s called a “cold wallet,” making them more difficult for hackers to reach.

South Korean Crypto Exchange Heavyweight Bithumb Gains Operating Permit

As foreign investors sell their holdings within that country, the result can lead to depressed real estate prices, a selloff in equity and bond markets, and exacerbate the economic conditions within the country. Capital controls are often put in place to prevent money from leaving the economy in an effort to prevent a massive selloff in domestic assets. Only the country’s four biggest exchanges – Bithumb, Coinone, Korbit and Upbit – have closed deals for real-name verification accounts with banks. Those are necessary for exchanges to offer Korean won trading pairs and payment options. Only 10 out of dozens of crypto exchanges in South Korea have registered with local authorities before the clock runs out on them on Friday, a notice on the regulator’s website shows. North Korean hackers have started to conduct attacks for financial gains to overcome crippling worldwide sanctions. A September report from security researchers at FireEye found at least six major attacks conducted by North Korea that targeted cryptocurrency in South Korea. The money it gains from these attacks could be going toward advances in its nuclear-weapons program. North Korea’s focus on Bitcoin comes after the cryptocurrency’s value skyrocketed to nearly $20,000a coin from just $1,000 at the start of the year.

A Huge Arbitrage Opportunity Has Just Opened Up in Crypto – Bloomberg

A Huge Arbitrage Opportunity Has Just Opened Up in Crypto.

Posted: Wed, 24 Nov 2021 05:29:00 GMT [source]

In May, the unemployment rate decreased to 9.3%, and in June, the rate dropped further to 8.8%. Bitcoin is a digital or virtual currency created in 2009 that uses peer-to-peer technology to facilitate instant payments. Terra refers to an open-source blockchain protocol for stablecoins and apps, and one of the two main cryptocurrency tokens under this protocol. When a trader engages in currency arbitrage, they place trades based on differences in the quotes for a specific currency pair offered by different brokers, rather than placing trades based on the exchange rate movement of the currency pair. If executed perfectly, this kind of trade can be risk-free since the trader is buying and selling two or more currencies simultaneously, making sure there is no open currency exposure. Full BioErika Rasure, Ph.D., is an Assistant Professor of Business and Finance at Maryville University. She has spent the past six years teaching and has included FinTech in personal finance courses and curriculum since 2017, including cryptocurrencies and blockchain. On September 2, 2020, Bithumb was reported in local Korean news that the Bithumb exchange was raided by the Seoul Metropolitan Police Agency’s Intelligent Crime Investigation Unit. According to the report, the search and seizure is related to suspicion of investment fraud.

The appeal centers around the decentralized nature of cryptos, meaning they’re not owned or controlled by a government entity. Another 18 exchanges are expected to submit filings on Friday, South Korean news agency Yonhap reported. Around 40 exchanges have given no indication on whether they plan to register and will likely cease operations on Friday, the agency reported. Three exchanges – Gdac, Gopax and Huobi Korea, which have all been negotiating with banks up to the last minute – failed to secure the partnerships and will be halting KRW trading effective tonight, CoinDesk Korea reported. A pedestrian speaking in to a mobile phone is reflected in a window as a monitor shows the prices of virtual currencies at the Bithumb exchange office in Seoul, South Korea, on Friday, Dec. 15, 2017. A further 28 have security certificates but have not secured bank partnerships. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Bithumb is the largest cryptocurrency exchange in the country, and indeed one of the top five worldwide. It’s being theorized that North Korea may have carried out the attack in response to financial sanctions put in place as a result of its development of nuclear weaponry, according to a report from BBC News. “There are great concerns regarding virtual currencies and justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” South Korea’s justice minister Park Sang-ki said at a press conference. Bitcoin’s plunge comes after futures contracts started trading on CME Group’s exchange, giving investors new ways to bet on the digital coin’s price moves. The news from South Korea unnerved traders because that country has been ground zero for a global surge in interest in bitcoin as the currency’s rally this year reached 1,600%.
Second, and perhaps more important, Bitcoin transactions can be traced; they are all recorded on its public blockchain. Users are pseudonymous, represented on the blockchain by strings of numbers and letters called addresses. But if investigators can tie an address to a real-world identity, they can track its every single transaction. South Korea is the only nation were investing in cryptocurrencies is truly mass market. Housewives, grandparents, millennials, boomers — people from every age group — have invested in a cryptocurrency. Some estimates state at least 30 percent of South Koreans have invested in them. Simon Kim, CEO of Hashed (Korea’s leading crypto fund) told me that number could be as high as 50 percent among white-collared professionals. Comparatively a recent study in the U.S. estimated that 8 percent of the population has invested in a cryptocurrency. They must submit the company’s details and the details of its bank account to the financial intelligence unit. They must register an authorised company bank account and provide customers with their own real-name accounts with the same bank.

Over 60 S Korean Crypto Exchanges Set To Suspend Services Next Week

Binance initially started in China but has since moved on to Malta and then now rumored to be in the Cayman Islands. It’s considered one of the more popular trading platforms due to its low fees. The second and third appear to be resumes stolen from two actual South Korean computer scientists, both with work experience at South Korean cryptocurrency exchanges. The crypto regulations left only 28 exchanges operating out of an original number of 63.
bitcoin exchange korea
Some major exchanges, including Binance, subsequently halted KRW trading pairs and removed Korean language support from their platforms. In April, the country’s Financial Services Commission mandated that all virtual asset service providers in South Korea register with its anti-money laundering arm, the Financial Intelligence Unit , by Sept. 24. Full registration requires security certification as well as partnerships with banks for real-name verification accounts. These 28 include what is collectively known as “The Big Four”, namely Upbit, Bithumb, Coinone and Korbit, who account for over 90% of crypto asset trading volumes in the country of South Korea. The Big Four have secured contracts with banks for real-name verification of accounts, and have received certification from the Korean Internet And Security Agency, meaning that their registrations were eligible for submission to the KFIU. Although there’s no indication that Asia’s No. 4 economy will shut exchanges that have accounted by some measures for more than a fifth of global trading, the news is a warning as regulators express concerns about private digital currencies. South Korea will require real-name cryptocurrency transactions and impose a ban on the offering of virtual accounts by banks to crypto-exchanges, according to a statement from the Office for Government Policy Coordination.

If you’re transferring money to a non-Korean Bitcoin Exchange with an overseas bank address, you will probably have to pay additional fees by your bank. Wire transfer to overseas banks may be costly depending on your domestic bank, and you may have to wait for the transfer to clear before receiving your Bitcoin. Also, most international exchanges do not accept KRW, so you’ll have to convert your KRW to USD. You may also have adjustments made to the BTC received due to the amount of time that has passed. As South Korean exchanges harden their networks and the government imposes stricter regulatory controls on cryptocurrencies, exchanges and users in other countries should be aware of the increased threat level from North Korean actors. Four of the country’s exchanges — Upbit, Bithumb, Coinone and Korbit — have registered with FIU and have bank partnerships, meaning they can offer won as an option on their platforms. ProBit, Cashierest and Flybit previously said they will not offer won on their exchanges until they land bank partnerships. And in September, Dunamu raised $85 million from venture capital firms, including Altos Ventures in Silicon Valley, at a valuation of around $8.7 billion.

What is Korea’s currency called?

Issued by the Bank of Korea in the capital, Seoul, the South Korean won is the official currency of South Korea. It’s abbreviated to KRW (short for Korean Republic won) and its symbol is ₩.

South Korean media has linked multiple suicides to the cryptocurrency crash. One university student in his early 20s who had invested $18,500 in cryptocurrency was reported dead by suicide on February 1st. Later that month, the mother of a 30-year-old IT worker found her own son who committed suicide. Some local reports suggested that either the individual or group responsible for UPbit’s loss preemptively targeted a period during which UPbit was moving its funds in alternative cryptocurrencies to its cold wallet. Youbit was previously targeted in April when nearly 4,000 bitcoins were stolen in a cyber attack by a spy agency linked to the North Korean government, Reuters said, citing local South Korean reports. They must establish expanded AML/KYC procedures using a risk-based approach, which includes customer due diligence and suspicious transactions reporting. This also requires a technical solution, which permits the exchange of customers’ personal data with transaction counterparties (FATF’s R.16 “travel rule”). It did not elaborate on the amount, but said all customers’ cryptocurrency assets would be marked down to 75% of their value. It added that it had stopped trading and would work to minimise customer losses. Yep, none of the exchanges are allowing foreigners real name verification in order to deposit/withdraw KRW, so as far as I know, the only option is P2P, asking friends to buy, or overseas exchanges (non-KRW) at the moment.
While cryptocurrency-related businesses have yet to see similar revenues, they may be poised to do so now that the South Korean government is putting the appropriate regulations in place. However, capital controls and financial regulations make profiting from the kimchi premium difficult for South Korean investors. Jake Frankenfield is an experienced writer on a wide range of business news topics and his work has been featured on Investopedia and The New York Times among others. He has done extensive work and research on Facebook and data collection, Apple and user experience, blockchain and fintech, and cryptocurrency and the future of money. On January 22, 2019, OTC-listed holding company Blockchain Industries signed a binding letter of intent to merge with Bithumb on or before March 1, 2019. The plan is to form a new publicly traded entity called the Blockchain Exchange Alliance that would ‘up-list’ on either the New York Stock Exchange or NASDAQ and make BXA the first major cryptocurrency exchange to go public. Exchanges were given a Sept. 24 deadline to complete the registration process, which includes proving partnerships with an internet security agency and a bank to ensure they meet know-your-customer requirements and have real-name accounts. What do you think about all these crypto exchanges having to shut down under the new regulation?

The first reason for the popularity of cryptocurrencies is the prevailing economic conditions in the country. Even though it is a fairly large and prosperous one, the South Korean economy suffers from a youth unemployment problem. During 2020, the unemployment rate ranged from 7.5% to 11%, continuing a similar pattern into 2021. The youth unemployment rate reached 10% in the months of February, March, and April 2021.

South Korea is the world’s third largest market in bitcoin trading, after Japan and the U.S., and the largest exchange market for ether, accounting for more than 33 percent of its market share, according to a recentMIT Technology Review report. The country is also home to two of the top 15 global digital-currency exchanges and believed to have about one million registered daily traders in virtual currencies, which is equivalent to about one out of every 50 citizens. In January, South Korea also began enforcing a requirement that the name on cryptocurrency investors’ bank account match the name on their account at a cryptocurrency exchange in order to deposit money into their virtual wallets. With exchanges now required to ensure their customers have real name bank accounts, they are also required to partner with domestic banks to establish real name accounts for their clients.

Then they will become as commonplace as mobile phones and a Neymar injury in a soccer match. Over 25 million of South Korea’s 50 million population became comfortable with the notion of a virtual currency having real value and the ability for people to earn money through trading platforms and black markets. It was a real tangible asset for many Koreans even to the point where grey markets were becoming rampant. As early as 2001, Korean gangs were creating trading businesses around Hangame and Hancoin. Invented in 2008, you store your bitcoins in a digital wallet, and transactions are stored in a public ledger known as the bitcoin blockchain, which prevents the digital currency being double-spent. The only cryptocurrency exchange that foreigners can directly link their Korean bank account to is GoPax. This is pretty much what happened.Unfortunately, as a foreigner in Korea, my options were a little limited due to citizenship restrictions, lengthy verification processes, and incompatibility with my Korean bank account. Binance, for example, blocked US citizens from their regular trading platform according to theblockcrypto.com. Etoro.com was a bust as it cannot “accept US citizens who do not live in the US.” And my accounts on Coinbase and Gemini have been pending for-ev-er. Coinbase customers based in Korea also cannot currently add a payment method to their account for buys, sells, withdrawals, and deposits.

Is Korean currency weak?

That sounds like a boatload, but it’s actually a lot less in U.S. dollars—the South Korean currency is one of the weakest in the world. Why is the South Korean won so weak? Currency rates right now put one South Korean won equal to just 0.00084 U.S. dollars. That’s almost 12 times less than the value of a penny.

The legislation was designed to oversee an emerging industry and develop rules around anti-money laundering processes. Rakesh Sharma is a writer with 8+ years of experience about the intersection between technology and business. Read more about Ethereum exchange here. Rakesh is an expert in investing, business, blockchain, and cryptocurrencies. South Koreans and South Korean firms are limited in their international purchases of Bitcoin. Also leading to the popularity of cryptos is the potential security issues or threats that South Koreans face from North Korea and its leader Kim Jong-un. Bitcoin and cryptocurrencies tend to be favored in countries or regions of the world that face political uncertainty and geopolitical risks.
The exchange rate has been volatile, with some deeming it a risky investment. In January 2021 the UK’s Financial Conduct Authority warned consumers they should be prepared to lose all their money if they invest in schemes promising high returns from digital currencies such as bitcoin. There have been fears over the ability for banks to cover losses on bitcoin trading, with a group of major investment banks writing a letter to US regulators to say that the system of regulation was ill-prepared. My Korean coworkers have recently complained about now being unable to use non-Korean crypto exchanges as their debit/credit cards are blocked on platforms like Binance. Just try to find an English-speaking employee to help fill out the forms in person as foreigners we’re not permitted to register an account online. I need to know which BTC wallets l can use to receive and sell my coins and be able to receive the money in my Korean bank account. Of course, there is now talk to the cryptocurrency tax in Korea being delayed to 2023. Coindesk and Coinquora both reported that the Korean government is still working on the new tax plan and will need more time.

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