South Korea was once a hub for blockchain projects, ICOs, and all things crypto, but as scams ravage the wider crypto world, regulators are treading carefully when it comes to developing the South Korean blockchain scene. Due to the tough and inflexible nature of the regulations in South Korea, a number of top blockchain projects are looking to cut off access to South Korean users, as well as relocate out of the country to a more flexible and pro-blockchain jurisdiction.
Crypto Exchanges at Risk of Going Bankrupt
It’s no secret that South Korea has clamped down on its crypto regulations, making it virtually impossible to operate in the region. However, only four crypto exchanges currently have been allowed to set up a Korean Won bank account, meaning there are more than 200 exchanges in the country that cannot accept Korean Won deposits. Experts have estimated that this will eventually lead to around 97% of all crypto exchanges based in South Korea either going bankrupt or leaving the jurisdiction for good.
In a recent government audit, 14 out of 21 crypto exchanges in the country failed. This is a worrying sign that security isn’t up to scratch and it’s exactly why the number of exchanges that have Korean Won bank accounts is so limited. Until these exchanges step up their standard, then they will never be permitted to have a Korean Won bank account and therefore Korean Won trading pairs.
Big Exchanges Step into the Fray
Binance is one of the biggest players looking to soak up the South Korean crypto trading volume, creating dedicated Korean Won trading pairs with a number of top cryptocurrencies. Additionally, the Binance Launchpad has taken a special interest in blockchain projects sprouting in South Korea.
The Jurisdiction Wars Rumble On
What we have forming is this interesting concept called the Jurisdiction Wars. Where multiple nations are proceeding full steam ahead with friendly blockchain and crypto regulations, companies looking to operate in the space are slowly migrating to these jurisdictions. This has created a war of regulations between various jurisdictions in order to attract the lion’s share of the blockchain companies. Malta once stood out as the shining beacon for blockchain with its regulations, but other jurisdictions such as Gibraltar are slowly starting to catch up.
As time passes in the South Korean market, we will likely see a large number of companies slowly leave the jurisdiction, heading towards Malta and Gibraltar for pro-blockchain regulations. Unless the South Korean regulators step up their game, we could see the country fade into a desolate landscape, void of any blockchain companies at all – which is a sight that nobody wants to see.