Closing a pile of cryptocurrency exchanges, investors beware

As the deadline for reporting to the financial authorities of virtual currency (coin) operators is approaching a week away, coin exchanges are continuing to inform the end of business. According to the relevant law, virtual currency business operators must report the information security management system (ISMS) certificate and real-name confirmation deposit and withdrawal account confirmation to the Financial Intelligence Service of the Financial Services Commission by the 24th. If a report cannot be made because the requirements cannot be met, the schedule of business closure and the method of asset refund must be announced at least one week in advance. Accordingly, on the 17th alone, dozens of small and medium-sized coin exchanges announced the suspension of business on their websites and apps.

Of the domestic coin exchanges, only four exchanges have been reported so far (Upbit Bithumb Coinone Korbit), so damage due to the closure of the business is expected to be inevitable. As financial investment is basically an individual responsibility, members of these small and medium-sized exchanges should hurry to take preemptive measures to minimize damage. It is safe to withdraw the deposit in advance before the exchange closes, and to transfer the coins held to other exchanges and personal wallets or to cash them out altogether. Prime Minister Kim Bu-gyeom also urged, “Please make sure to withdraw your deposits and virtual assets within the period.”

Exchanges that are likely to close will need to be notified individually to all members rather than with a single announcement, so that there are no gaps in the guidance. There is one week left until the filing deadline, but considering the Chuseok holidays, the time for users to withdraw or cash out is tight. It is at the minimum level to find and notify long-term inactive members.

The government should also check whether the exchanges of interest are properly notified. It is necessary to continue management and supervision so that users can find their deposited assets even after the business is closed. It is also necessary to crack down on illegal acts such as plan bankruptcy or embezzlement of deposits. It is expected that institutional management and investor protection will be upgraded to a higher level if insolvent illegal exchanges are expelled due to a business report. Considering this, the taxation of gains from the transfer of virtual assets should be addressed from next year.