Huobi Korea to Shut Down Services
South Korean cryptocurrency exchange, Huobi Korea, has made the decision to close its services from January 29, 2024. The company cites a challenging business environment as the reason behind this move. Established in 2017, Huobi Korea had previously separated from HTX (formerly Huobi Global) in January 2023. Other smaller South Korean exchanges, including Cashierest and Coinbit, also announced closures in November.
Huobi Korea has assured its users that they will still be able to withdraw their funds even after the shutdown. The company is committed to ensuring a smooth transition for its customer base.
Market Dominated by Top Exchanges
The decision by Huobi Korea reflects a trend in the South Korean cryptocurrency market where the top five exchanges—Upbit, Bithumb, Coinone, Korbit, and Gopax—control 99.6% of the total crypto trade volume as of June 30, 2023, according to the Financial Services Commission (FSC). This dominance is due to the country’s stringent regulatory environment for exchanges.
South Korean exchanges are required to have a partnership agreement with a local bank in order to offer fiat-to-crypto services. This regulation aims to mitigate risks related to money laundering and price manipulation. However, Huobi Korea and 20 other exchanges failed to secure such partnerships and were limited to crypto-to-crypto trading.
New Regulations on the Horizon
The upcoming “Virtual Asset Investor Protection Act,” expected to be implemented in July 2024, will impose additional responsibilities on cryptocurrency exchanges for safeguarding user funds. These obligations include holding 80% of total user funds or their equivalent value in a secure cold wallet and obtaining insurance coverage to ensure compensation for users in case of hacks or system failures.
Hot Take: Huobi Korea Closes Amidst Challenging Business Environment
South Korean cryptocurrency exchange, Huobi Korea, has announced the closure of its services due to a challenging business environment. This decision aligns with the dominance of a few top exchanges in the South Korean market. The country’s regulatory environment has posed difficulties for smaller exchanges like Huobi Korea, which failed to secure partnership agreements with local banks. The forthcoming “Virtual Asset Investor Protection Act” will impose further responsibilities on exchanges, aiming to enhance user fund protection. As the crypto landscape continues to evolve, it remains to be seen how these regulations will shape the industry in South Korea.
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