The borderline for S Korean crypto exchanges to run into new compliance requirements is looming fast, with all operators expected to submit requests for an official license with the Financial Services Commission (FSC) no later than Sept. 24.

Industry actors and representatives for smaller exchanges have contested the new requirements for much of the past year.

The crux has been the obligation that all exchanges testify evidence that they are operating using real-name accounts at South Korean banks. The FSC has justified past arguing that in that location is a high need from customers for more than protection for their assets held at smaller crypto platforms. Yet South Korea'due south banks have, for the near role, refused to engage in any hazard assessment process for applicant exchanges, except for the country's top four trading platforms.

These four exchanges — Upbit, Bithumb, Korbit and Coinone — already account for over 90% of South Korea's total traded book, and experts have in recent months fabricated the case that the FSC's new framework is poised to further cement the country'due south crypto space every bit a monopolized marketplace. Some reportedly expect that shut to 40 of the country's estimated sixty crypto operators will be forced to shut downwardly.

Moreover, estimates by Kim Hyoung-joong, a professor at and the head of the Cryptocurrency Research Eye at Korea Academy, predict that the mass substitution closures will eliminate 42 "kimchi coins" — a moniker for smaller altcoins that are listed on smaller platforms and traded against the Korean won. Lee Chul-yi, head of local crypto exchange Foblgate, has told the Fiscal Times that:

"A situation similar to a bank run is expected near the deadline as investors tin't cash out of their holdings of 'alt-coins' listed only on small exchanges. [...] They will find themselves all of a sudden poor. I wonder if regulators can handle the side-effects."

Related: Regulations bulldoze Korean exchanges to delist, warn confronting loftier hazard coins

With altcoins estimated to account for 90% of traded book in South Korea'due south crypto markets, the FSC has reportedly advised those exchange operators who expect to shut down to notify their clients no afterward than Sept. 17. Cho Yeon-haeng, president of the Korea Finance Consumer Federation, has claimed that customer protection is unlikely to be the priority for those exchanges facing imminent closure and that "huge investor losses" are therefore expected due to the freezing of assets and suspension of trading on smaller platforms.

The regulatory heat volition also affect international exchange operators. Binance already pre-emptively halted Korean won trading pairs this summer to ensure it does not foul Korean authorities.

The new measures have been designed to curb Koreans' enthusiasm for crypto trading amid concerns that retail investors, peculiarly those from younger generations, are borrowing excessively in gild to trade as they struggle with suppressed wages, a frozen job market and ever-rise real-manor prices.