South Korean Crypto Exchanges to Face More Restrictions

South Korean crypto exchanges are set to face more problems as the country’s financial regulator plans to ban cross-trading.

South Korea’s financial regulator will ban local cryptocurrency exchanges from conducting transactions without record keeping, South Korean news agency Newsis reported on Sunday.

A closed-door meeting was held last week, attended by as many as 20 South Korean cryptocurrency exchanges, during which the Financial Services Commission outlined a regulation that exchanges must meet if they want to continue operating in the country.

The rule will ban cross-trading, where buy and sell orders for the same asset are executed at the same price without recording the trade. To continue to profit from cross-trading, exchanges must open dedicated fiat currency conversion businesses.

The exchange did not like the rule, saying it was expensive to run a fiat currency business and that banning cross-currency trading would lead to bankruptcy.

However, the Financial Services Commission believes that limiting cross-trading will prevent price manipulation and ensure that exchanges do not get information before their customers.

Small exchanges have previously complained that the cost of applying for a license is too high, and only a few with sufficient funds are able to meet the Financial Services Commission's strict requirements.

In any case, all major exchanges must apply for licenses before September 24, otherwise they will be shut down.