Unable to Find Banking Partner, Cryptocurrency Exchange in South Korea Fears Closure

ByEdward Thompson

Sep 17, 2021

As per the latest reports, Gopax, a cryptocurrency exchange based in South Korea has made an announcement. The exchange has announced that it is currently looking at high chances of being closed. The exchange has announced that the closure may be faced due to the exchange being unable to find a banking partner to acquire licensing from the South Korean regulator. Gopax is reportedly backed and supported by the Digital Currency Group.

However, the platform is still aiming to find the bank ready to become its partner and let it open an account with the exchange’s name. While the exchange is making all the efforts of finding a partner, the deadline for the submission of licensing is closing in. If the exchange is unable to provide the required information to the regulator, it will not be able to operate in South Korea.

After forming a partnership with a bank and opening an account through the particular bank, the exchange would be able to launch a request with the regulator for the acquisition of an operating license.

According to the new rule in South Korea, any cryptocurrency exchange wanting to operate legally in South Korea needs to acquire an operating license. In order to acquire an operating license from the regulator, they must partner with a local bank in South Korea and open an account using a real exchange name.

Once these requirements have been fulfilled, only then the cryptocurrency exchange can submit a request for an operating license in the country. Unfortunately, the real problem that the cryptocurrency exchanges are facing is cooperating with the local banks in South Korea.

The South Korean banks have completely refused to partner with cryptocurrency exchanges and are not letting them open an account. This is because the banks do not want to go through the trouble of risk assessment processes. Whether the banks partner with small exchanges, medium exchanges, or giant exchanges such as Bithumb, they would need to engage in risk assessment processes with South Korean regulators.

So far, the local banks have only partnered with four cryptocurrency exchanges that are considered top exchanges in South Korea. The names of these exchanges include Coinone, Korbit, Bithumb, and Upbit. Now, the deadline for submitting the applications for a license is just a week away, which is September 24, 2021.

On a public note, Gopax team communicated to all the users/investors and stakeholders about what they were doing in terms of licensing. Gopax team has revealed that they are currently negotiating with one of the financial institutions about opening an account with is real-name.

However, if the negotiation does not fall through, then they will have to discontinue and shut down their cryptocurrency exchange.

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