10 March 2023 14:39, UTC
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South Korea’s top financial regulator, the Financial Services Commission (FSC), has begun a “comprehensive inspection” of the nation’s crypto exchanges.
Per Decenter, Financial Services Commission (FSC) specifically wants to probe the 20 trading platforms that do not have licenses to trade fiat KRW. The media outlet noted that this is “the first time” the FSC has conducted a “comprehensive inspection” of exchanges that do not operate in the fiat markets.
The outlet said it expected that the inspection will focus on anti-money laundering protocols.
Under South Korean law, exchanges can offer crypto-to-crypto trading services, provided they meet certain criteria. To obtain fiat-trading licenses, however, they must form partnerships with commercial banks.
These banks must provide all exchange users with real name-, social security number-verified accounts linked to their crypto wallets.
The “big four” crypto exchanges – Upbit, Bithumb, Korbit, and Coinone – have had such banking partnerships in place for several years. The remaining 21 South Korean exchanges, meanwhile, have been left to pursue banking deals with domestic banks. Thus far, only one of their number – Gopax – has been successful.
Which South Korean Exchanges Will Be Investigated?
The FSC stated that it would begin its probe with GDAC. This is one of the exchanges involved last year in the controversial delisting of the Wemix token – a coin created by the domestic gaming giant WeMade.
GDAC left observers stunned when it announced that it would be listing Wemix – just two hours after the “big four” announced they would be removing the coin from their platforms.
Trading volumes on South Korea’s market-leading Upbit crypto exchange over the past seven days. (Source: CoinGecko)
The media outlet stated that some insiders believe the FSC has decided to start its probe at GDAC for this reason.
But others appear to believe that the authorities “may have started” its investigation with the exchange ahead of a possible GDAC application to rejoin the KRW market. This would suggest that a behind-the-scenes deal may have been struck with a bank.
The media outlet reported that GDAC officials said they had not yet been informed about the date of the FSC visit.
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