South Korean Cryptocurrency Exchanges Required to Maintain Minimum Reserves of $2.3 Million (Report)

The Korea Federation of Banks (KFB) is reportedly planning to mandate that domestic cryptocurrency exchanges maintain a minimum reserve of 3 billion won (approximately $2.26 million).

Recently, local authorities have adopted a stringent approach towards these entities, urging them to establish clear guidelines regarding the listing and delisting of digital assets to ensure optimal protection for consumers.

The Upcoming Requirement

According to a Korean media source, these changes are anticipated to take effect at the beginning of September. They will require cryptocurrency exchanges with “real-name accounts” to accumulate reserves ranging from $2.26 million to about $15 million. This reserve will serve as an emergency fund in case of incidents such as hacking attacks.

It is important to note that the minimum reserve of $2.26 million will apply solely to smaller cryptocurrency exchanges. Major players like Upbit, Korbit, or Bithumb are required to hold at least 30% of their daily average deposits.

Several leading exchanges have already begun to align with the new regulations. A representative from Upbit remarked:

“We are preparing smoothly in accordance with the guidelines of the Korea Federation of Banks.”

Another official from an unnamed trading platform expressed confidence that the requirement would not pose a challenge for any cryptocurrency exchanges in the region.

The KFB also intends to introduce further safety protocols, including stricter know-your-customer (KYC) measures and verification for collection transfers. These modifications are set to be implemented at the start of 2024.

More Scrutiny Following the Terra Meltdown

In 2021, South Korea’s Financial Intelligence Unit (FIU) directed all domestic cryptocurrency exchanges to adhere to anti-money laundering (AML) regulations. It also mandated that these organizations work with banks to secure accounts for real-name verification. As reported by CryptoPotato, over 60 marketplaces failed to register with the FIU and subsequently halted operations.

The collapse of Terra’s native token – LUNA – and its algorithmic stablecoin – UST – in the spring of 2022 further prompted South Korea’s monetary regulator to maintain a heightened focus on the cryptocurrency sector.

The drastic decline of both assets to nearly zero left many investors at a loss and weakened the overall credibility of the digital asset industry.

Consequently, Korean lawmakers convened a meeting with the country’s largest cryptocurrency exchanges to establish suitable regulations concerning the listing and delisting of cryptocurrencies, thereby enhancing consumer protection.

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