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South Korea’s Financial Regulators Intensify Scrutiny on Crypto Exchanges’ Pledge Services

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On February 24, the South Korean financial authorities recently asked the country\’s encryption exchange based on the Korean won to prove the driving principle …

South Korea’s Financial Regulators Intensify Scrutiny on Crypto Exchanges Pledge Services

On February 24, the South Korean financial authorities recently asked the country’s encryption exchange based on the Korean won to prove the driving principle of its pledge service and the evidence related to its merchantability. Three quarters of the Korean-based crypto exchanges that provide pledge services in the country recently admitted that they had received a request from the country’s Financial Supervision Institute to investigate their pledge services.

South Korea’s financial regulator is investigating the pledge service of the country’s encryption exchange

Interpretation of the news:


The South Korean government has been unyielding in its efforts to regulate the cryptocurrency market, particularly in areas such as initial coin offerings and KYC/AML compliance. The recent scrutiny of crypto exchanges that offer pledge services adds a new dimension to the government’s regulatory interventions.

Crypto exchanges that provide pledge services allow users to borrow cryptocurrencies by putting up other cryptocurrencies as collateral. However, the South Korean financial regulators are concerned about the risks associated with such services, especially when the collateral is not transparently and effectively managed.

In response to the regulators’ request, the exchanges are being asked to provide detailed information regarding the driving principle of their pledge service, as well as evidence to support the merchantability of their service. This is aimed at ensuring that the services being offered are not being used for illicit activities such as money laundering and terrorism financing.

It is noteworthy that three-quarters of the exchanges that offer pledge services in South Korea have admitted that they received a request from the Financial Supervision Institute for the investigation of their pledge services. This suggests that regulatory oversight of these services will continue to increase, and exchanges that fail to comply with regulatory requirements could face penalties and other legal consequences.

South Korea has been a significant player in the cryptocurrency market, with its domestic exchanges accounting for a significant share of global trading volume. Therefore, the country’s regulatory actions may have far-reaching implications for the industry as a whole, influencing policies and practices worldwide.

In conclusion, with cryptocurrencies gaining mainstream acceptance, it is inevitable that they will be subject to increased regulatory scrutiny. South Korea’s regulatory bodies’ growing interest in the pledge service offered by crypto exchanges is an indication of this trend, and the industry should brace itself for more regulatory interventions.

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