In its advanced communication, the HTX (formerly Huobi) revealed plans to discontinue operations in South Korean. The HTX report demonstrated that as of January 29, the South Korean office will wind down operations.
News concerning the unexpected sunsetting of the Korean arm sparked speculation among the crypto community. One social media user inquired the reason why controversial crypto exchange plans to exit the vibrant South Korean market.
Huobi Set to Close Business in South Korea
In his statement, the troubled customers admitted that fast-paced fintech and crypto firms were flocking to South Korea to meet the growing demand for Web3 services.
Despite the volatile nature of crypto assets, South Korean young adults have portrayed their high appetite for crypto, Web3 and blockchain technologies.
According to the announcement, the Huobi team regretted that the challenging business environment forced the firm to exit South Korea. However, before the closure of business, the crypto exchange advised the customers to withdraw their funds from the platform. The HTX added that withdrawal will proceed even after the impending closure of the business.
In the report, the HTX team confirmed that it has been operational for nearly a decade in South Korea. Citing the current business environment in the region, the HTX agreed to suspend offering virtual asset exchange services in South Korea.
As South Korea seeks to regulate the crypto industry, regulators have levied harsh regulations to safeguard the digital space from exploitative activities.
The changes in regulation on digital assets have forced local crypto exchanges to expand to offshore markets. In November, local crypto exchanges, including Cahierest and Coinbit, suspended operations in South Korea due to an unfavorable business environment.
Reportedly, the challenging business environment has forced vital market players to flee the South Korean market and seize viable opportunities in offshore markets.
Unfavourable Business Environment
The global expansion plan has placed some South Korean-based crypto exchanges in a considerable market position. A review of the Financial Services Commission (FSC) report demonstrated that from June last year, the best-performing crypto exchanges in South Korea, including Upbit, Coinone, Korbit, Bithumb, and Gopax, facilitated approximately 99.6% of transactions in the country.
The FSC report indicated that following the rise of criminal activities in the crypto sector, the regulator stepped up and enforced stringent policies for digital assets. The report demonstrated that the new provision for digital assets impacted the amendment of the existing financial laws.
Under the new rule, crypto exchanges must collaborate with local financial institutions and banks offering the customers fiat-to-crypto services. The collaboration between the banks and the crypto exchanges aims to combat money laundering and fraudulent schemes.
Regulators Seeks to Supervise the Crypto Industry
However, the FSC noted that most crypto exchanges failed to meet the compliance requirements necessary for obtaining bank partners. The failure to meet the new guidelines forced the regulators to limit fiat-to-crypto services to only compliant crypto exchanges.
Based on the FSC requirement, the crypto exchanges that failed to secure a bank partner were allowed to offer crypto-to-crypto services.
Besides the FSC’s new provision, the policymakers in South Korea approved the Virtual Asset Investor Protection Act, which outlines the responsibilities of crypto exchanges. This bill highlights the measures for safeguarding the customers’ funds from exploitative business activities.