After many cryptocurrency exchanges were reported to suspend their operations in South Korea, LINE group has also announced that Bitfront, LINE’s group subsidiary, would also halt its services for Korean residents.
The news, reported by South Korea’s local newspaper Yonhap News, came after regulatory authorities in the country introduced a new license system for crypto exchanges that will come into effect from September 24.
According to reports, Bitfront would discontinue payments from Korean credit cards. Along with this, it would also stop providing a Korean-language service to users in South Korea.
Previously, the largest cryptocurrency exchange Binance also issued a statement confirming that it would suspend trading pairs and payment options using the Korean won. It has halted all its services in South Korea.
The back-pedal from various crypto exchanges came after Korean authorities announced a system that requires exchanges to the nation’s anti-money laundering body and file their policies on risk management.
The exchanges need to acquire a license from the Financial Information Analysis Institute (FIU), which belongs to the Financial Services Commission (FSC). Failing to register with the authorities and continuing their business would result in imprisonment of up to 5 years or a fine of up to 50 million won ($42,500).
According to the report, nearly 100 exchanges were operating in South Korea before the regulatory crackdown, forcing the majority to halt their operations.
To register for the license, exchanges are required to register with a bank and open with a user’s real name account. However, it is difficult to do so considering many banks refrain from partnering with crypto exchanges.
In addition to the mandatory registration, the authorities might enforce a 20% tax on capital gains on cryptocurrency transactions.
Cryptocurrency investment has been gaining momentum amongst younger generations in the country. Korea Herald, South Korea’s English-language daily conducted a survey that reported over 40.4% of the 1,855 respondents were investing in cryptocurrencies. More than half were millennial office workers in their 30s and 34.5% were in their 40s.