As crackdown looms, South Korea’s defiant crypto fans dig in

SEOUL: Yun Hae-ri, a 26-year-old South Korean cryptocurrency investor, has seen the value of a coin named Metadium nearly wiped out since she bought it in April.

Like many South Korean retail investors, Yun has thousands of won in smaller cryptocurrencies, seen as alternatives to bitcoin, which have plummeted in value as regulators crack down on the sector.

By Sep 24, South Korea’s numerous cryptocurrency exchanges will need to disclose risk management and partner with banks to ensure trading accounts are held by real people.

The rules, analysts say, could result in exchanges delisting hundreds of such “altcoins” as they vie for tie-ups with banks.

“I have to admit that I did not look at the operator’s financial statement, but mostly invested based on the coin’s popularity and appearance on media and friends’ recommendation,” said Yun, who trades Metadium on Upbit, the country’s largest crypto exchange. She now worries Metadium could be delisted ahead of the September deadline.

The new law was passed in early March and since then, only four of more than 60 exchanges-Upbit, Bithumb, Coinone and Korbit-have secured the partnerships with banks needed to be registered as virtual asset service providers.

The law also requires them to obtain a security certificate from South Korea’s internet security agency. Only 20 exchanges had received such certificates as of May.

Metadium’s price plunged as much as 94 per cent from early April to 32.1 won (US$0.0281) in late June on Upbit, as several local cryptocurrency exchanges took dozens of altcoins off their platforms.

In late June, Upbit halted trading of 24 altcoins, such as Komodo, AdEx, Lbry Credits, Ignis, Pica and Lambda. Another major operator Bithumb nixed four coins last week.

Smaller operator Probit removed 145 coins all at once in June, sparking concern among investors that more coins could be removed as the September deadline approaches.