Regulations and Bear Market Lead to Closure of Small Cryptocurrency Exchanges in Korea

The bear market in cryptocurrencies and regulatory aftermath are leading to the closure of many small and medium-sized exchanges in Korea that only trade in cryptocurrencies. As of November 19, only three out of 22 such exchanges are still active. The trading volume of these exchanges is drastically lower compared to major exchanges that support KRW transactions.

The primary issue is that CoinMarket exchanges require users to trade in Bitcoin or USDT, leading to double fees and higher costs than KRW exchanges. Consequently, small exchanges have survived by offering cryptocurrencies unavailable on KRW exchanges, but recent market conditions have driven investors towards more stable major cryptocurrencies like Bitcoin and Ethereum.

As a result, fee revenue for small exchanges has plummeted. Attempts to transition to KRW exchanges have failed due to regulatory criteria, leading to several exchanges shutting down. Eight exchanges, including Cashrest and Huobi Korea, have announced closures, and more are expected as compliance burdens increase. Some exchanges have closed their websites or ceased trading, with many struggling to cover operational costs.

Experts believe the strict regulations and inability to trade in KRW have weakened the competitiveness of these exchanges, making it difficult for them to survive in the current market.

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