South Korea’s regulatory deadline is approaching, is a run on the cryptocurrency market coming?

South Korean cryptocurrency exchanges are facing losses of approximately $2.6 billion, and two-thirds of local exchanges will disappear. Industry insiders have warned that "the cryptocurrency market may experience a situation similar to a bank run."
As South Korea's regulatory policies on cryptocurrencies become increasingly strict, South Korean cryptocurrency exchanges face losses of more than 3 trillion won (about US$2.6 billion), and two-thirds of the exchanges will disappear.
South Korea’s Financial Services Commission (FSC) has set September 24 as the deadline for exchanges to register as legal trading platforms. Nearly 40 of South Korea’s 60 cryptocurrency operators are expected to shut down.
Kim Hyung-joong, professor and director of Korea University’s Cryptocurrency Research Center, estimated that the mass closure of smaller exchanges could lead to the disappearance of 42 “kimchi coins.”
Kimchicoin refers to small-cap cryptocurrencies that are basically listed only on local exchanges in South Korea and are mainly traded in Korean won.
At the same time, industry insiders warned that the cryptocurrency market "may experience a bank run-like situation."
Cho Yeon-haung, chairman of the Korea Financial Consumers Federation, said trading suspensions and asset freezes at many small exchanges are expected to cause heavy losses to investors.
Faced with high housing prices and survival pressures, despite the huge fluctuations in cryptocurrencies, young Koreans continue to pin their hopes on getting rich quickly by speculating in cryptocurrencies.
This has also led to a highly speculative cryptocurrency market in South Korea. According to the Financial Times, about 90% of transactions in the market come from currencies other than Bitcoin.
Data from Coinhills shows that the Korean won is the third most widely used currency in Bitcoin transactions, after the US dollar and the euro, accounting for about 5% of global Bitcoin transactions.
However, 90% of South Korea’s cryptocurrency trading volume currently comes from four major local exchanges: Upbit, Bithumb, Korbit and Coinone.
In addition to South Korea’s crackdown on local exchanges, its regulations have also affected won trading on cryptocurrency exchanges worldwide. The FSC has issued notices to 27 non-local exchanges that provide services in South Korea.
Binance, the world's largest cryptocurrency exchange, suspended cryptocurrency exchanges in South Korea last month, saying it would actively comply with local regulations. This is the first time a major overseas exchange has taken such a move.

Bitcoin has experienced a roller coaster trend this year, reaching a peak of $64,000 in April, and then plummeting to below $30,000. As of press time, Bitcoin was trading at $44,789, down 0.84% ​​on the day. (Wall Street News)