Huobi Korea to Cease Operations
South Korean cryptocurrency exchange Huobi Korea has announced that it will be closing down on January 29, 2024, citing a challenging business environment as the reason for its decision. The exchange will continue to support users in withdrawing their assets from the platform. This move follows the closure of several other South Korean exchanges, including Cashierest, Coinbit, and the temporary suspension of trading services by CoreDAX.
Decline in Competition
The South Korean crypto market is now dominated by a few major players, with Upbit, Bithumb, Coinone, Korbit, and Gopax holding 99.6% of the total trading volume. This concentration of power is a result of strict regulations that were introduced in 2021 to combat money laundering and market manipulation. Crypto exchanges operating in South Korea are required to have a partnership agreement with a local bank to offer fiat-to-crypto services, which smaller exchanges like Huobi Korea have struggled to secure.
Upcoming Regulations
The Virtual Asset Investor Protection Act is set to become law in July 2024. This legislation will impose additional responsibilities on crypto exchanges to protect customer assets. Exchanges will be required to hold 80% of user funds in cold wallets and obtain insurance coverage for compensation in the event of a hack or system failure.
Hot Take: Huobi Korea’s Closure Reflects a Challenging Crypto Landscape
The closure of Huobi Korea highlights the difficulties faced by smaller exchanges operating in South Korea’s highly regulated crypto market. With a few major players dominating the industry, it has become increasingly challenging for smaller exchanges to compete. Additionally, upcoming regulations that aim to safeguard customer assets and prevent fraud will place further burdens on crypto exchanges. These factors will continue to shape the landscape of the South Korean cryptocurrency industry in the coming years.
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