The number of South Korean digital currency projects leaving the country to list their products on foreign exchanges is increasing, experts say.
South Korean news outlet Business Korea reported on Aug. 19 that industry experts have noticed a surge in cryptocurrency and blockchain-focused projects seeking to list their early-stage products on overseas platforms.
Experts define reasons behind projects’ departure
Experts named several key reasons that local projects are leaving, including stricter domestic cryptocurrency exchange market conditions, wherein investors are not able to make or withdraw deposits in the Korean won on Korean exchanges. Another reason named is low transaction volume.
According to experts, about 200 smaller exchanges cannot open real-name virtual accounts, and 97% of local exchanges are in danger of going bankrupt due to low transaction volume.
New norms for cryptocurrency exchanges
South Korean cryptocurrency exchanges Bithumb, Upbit, Coinone and Korbit will have to comply with new, stricter norms to successfully renew their banking partnerships following the FATF guidance released in June.
The new FATF guidance has invited criticism from privacy advocates in the industry. One aspect that received particular vitriol was the travel rule, which requires that virtual asset service providers collect and transfer customer information during transactions.
In August, the Financial Intelligence Unit of South Korea’s Financial Services Commission revealed plans to bring cryptocurrency exchanges under its direct regulation. The South Korean government plans to introduce a crypto exchange licensing system, as recommended by the FATF. This will purportedly enhance the transparency of cryptocurrency transactions.