South Korea’s cryptocurrency exchange market is shrinking, with new government data revealing a sharp decline in the number of registered virtual asset service providers.
According to local news outlet Dailian, a February 7 report from the country’s Financial Intelligence Unit (FIU) showed that registered crypto trading firms have fallen to 31, a 26% decrease from 42 last year.
Token-only exchanges have been hit the hardest. Because these exchanges do not support real-name bank accounts or fiat trading (e.g., U.S. dollar or Korean won), they struggle to attract users and maintain liquidity, leading to persistent financial difficulties.
The FIU report revealed that over 90% of these exchanges suffered total capital erosion in 2023, forcing several—including Qubit and Coinbit—to shut down. Other delisted exchanges include GDAC, ProBit, Huobi Korea, and Bitrade.
Beyond financial struggles, regulatory compliance has played a key role in the decline. Many platforms failed to renew their registrations, leading to their removal from South Korea’s official registry. This trend underscores the government’s firm stance on compliance, further accelerating market contraction.
Looking ahead, the FIU predicted that the crypto exchange market may shrink further. Some firms on the registry have reportedly announced plans to exit, while others are shifting operations overseas due to regulatory uncertainty.
Meanwhile, amid these challenges, South Korea’s Financial Services Commission (FSC) announced that it has entered the second phase of discussions on revising the country’s Virtual Asset User Protection Act. FSC Vice Chairman Kim So-young stated that the revisions would introduce a comprehensive regulatory framework covering stablecoins, asset listings, and exchange operations.
Kim emphasized aligning with global regulations, such as the European Union’s MiCA. The final version of the revised bill is expected later this year.
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