Dunamu's Upbit becomes first registered cryptocurrency exchange

Finance

Published: 17 Sep. 2021, 18:09 Updated: 17 Sep. 2021, 20:58

Dunamu's Upbit becomes first registered cryptocurrency exchange

A screen capture of Dunamu's online homepage [SCREEN CAPTURE]

The Financial Services Commission (FSC) announced Friday night that Dunamu, operator of cryptocurrency exchange Upbit, is the first virtual asset service provider to complete registration with the government.

The FSC said that it formed a committee consisting of nine outside experts to assess the registration application submitted by Dunamu and decided to give it the green light.

According to the FSC, six virtual asset service providers applied to register with the government as of 6:30 p.m. Friday. Four cryptocurrency exchanges — Dunamu's Upbit, Bithumb, Coinone and Korbit — had completed application as of Sept. 10. The other two are cryptocurrency exchange Flybit and digital wallet service provider Korea Digital Asset.

Assessments on the five other applicants are ongoing.

The registrations are in line with a massive shutdown of cryptocurrency exchanges that became a reality this week. Unqualified exchanges issued warnings to their users Friday that they will be closing after Sept. 24.

Friday was the deadline for exchanges to deliver notices of their business suspension to users if they had not met requirements by the government to continue operations.

Under an amendment to the Act on Reporting and Using Specified Financial Transaction Information, a local law intended to prevent money laundering, crypto exchanges have until Sept. 24 to register as virtual asset service providers at the Korea Financial Intelligence Unit, a body under the FSC responsible for implementing anti-money laundering practices in Korea.

To register, the exchanges needed to tick two boxes. One is to partner with banks that would issue accounts in the name of the actual traders of cryptocurrencies.

The other is to obtain the Information Security Management System (ISMS) certification from the Korea Internet & Security Agency, ensuring the exchanges have achieved a certain level of information security.

According to the FSC, 24 other exchanges managed to obtain the ISMS certification but failed to partner with banks.

In this case, the exchanges can still operate by only offering trading via cryptocurrencies, meaning traders can purchase other crypto assets with bitcoin but will not be able to cash out in Korean won.

ProBit and Foblgate are two of the small exchanges that have obtained the ISMS certification but failed to clinch partnership with banks.

Cryptocurrency exchange Foblgate informs users that its Korean won-based trading service will be closed from Sept. 23 in a pop-up notice on its online homepage from Monday. [SCREEN CAPTURE]

ProBit informed users Thursday that it will be closing Korean-won based trading as of Sept. 23. The exchange started blocking won deposits from Friday.

Foblgate posted a notice Monday that it is also suspending won trading from Sept. 23. It blocked won deposits from Thursday.

Both exchanges, however, said they are "temporarily" suspending the won-based trading, adding they will strive to resume won-based trading after Sept. 24.

As exchanges start closing down, financial authorities on Friday released a statement asking cryptocurrency traders to check whether the exchanges they are using are due to close and to withdraw money before they do so.

The FSC warned users they should be careful of trading lesser-known coins or coins that are listed on only a few exchanges as it can be difficult for users to cash out those coins if the exchanges close.

The FSC also said that just because a certain exchange has obtained ISMS certification or anti-money laundering-related certification that does not guarantee users are free from hacking or financial fraud-related risks.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]