OKEx Korea to shut down on April 7, cites new AML rules

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OKEx Korea is shutting down next month. In its announcement, the South Korean branch of the global digital currency exchange requested that all its users withdraw their holdings before April 7.

OKEx Korea has been operating in a market dominated by the two local powerhouses—Bithumb and Upbit. In the past 24 hours, the exchange processed just $1.3 million in trading volume. In comparison, Upbit and Bithumb processed $12 billion and $2.1 billion respectively.

OKEx Korea, similar to the other small local exchanges, has been surviving through order book sharing with international exchanges. However, the revised Financial Transactions Reports Act prohibits this, stating, “Cryptoasset providers may not allow customers to trade with the customers of other cryptoasset providers through alliances.”

The Act has already claimed another local branch of an international exchange in Binance Korea which shut down in December, just eight months after launch.

The Act also requires all exchanges to set up real-name verification for all deposits and withdrawals with an approved bank. This has also proven to be challenging for smaller exchanges. A spokesperson for OKEx Korea told another outlet, “Up until now we’ve provided most of our services with fiat on-ramps, but forming a bank partnership for real-name accounts is realistically out of reach.”

The spokesperson added, “We struggled to get the Information Security Management System certificate and virtual account [which is a bank account exchanges now require to operate]. As a joint venture company with OKEx.com, it was hard to decide, but we had no other option.”

In the end, after considering all the changes it would have to implement in order to comply with the Act, OKEx Korea decided it wouldn’t be feasible. “In addition to several other factors, actual profits from our Korean operation don’t add up to much, so we decided to cut our losses,” the spokesperson concluded.

All eyes are on Huobi Korea, the only local branch of a global exchange still operating in Korea after Binance and OKEx exits. However, unlike the other two, Huobi Korea has been thriving and posting much higher trading volume. At press time, it had processed $123 million in the past 24 hours. While this is still way below the $7.4 billion the parent company Huobi Global processed, it’s still much higher than its rivals.

See also: CoinGeek Live panel, Digital Currency & Global Compliance: Tools & Tips for Exchanges, Wallets & Other Service Providers