South Korean Crypto Exchange Daybit to Close Operations by June 1

South Korean cryptocurrency exchange Daybit, operated by Chain Partners, recently announced that it has planned to shut down its operations by June 1. The decision was made due to the toughened anti-money laundering law.

Before this annoucement, CPDAX, another such exchange in the country, also decided to close its operations earlier this year.

The company stated that, “The operation of Daybit will be halted in phases by June 1 as we are unable to provide normal transaction services amid the toughened regulatory environment after the Act on Reporting and Using Specified Financial Transaction Information went into effect recently.” As a result, Daybit’s contracts with Shinhan Bank are to end before June.

The revised Act on Reporting and Using Specified Financial Transaction Information requires crypto exchanges to be equipped with information security management systems and to form partnerships with local banks by Sept. 24. On that date, the grace period ends and all crypto accounts must be linked with bank accounts in the holders’ real names.

“There are more than 10 exchanges that completed (information security management systems), which is one of the requirements for exchanges that hope to be registered with the Financial Intelligence Unit, but they are having difficulties to get real-name accounts from local banks,” said a source on condition of anonymity. “Out of more than 100 exchanges, we are very likely to see more closures,” the source added.

Currently, accounts with the big four exchanges -- Upbit, Bithumb, Coinone and Korbit -- are linked to local lenders, but the smaller ones are struggling to find partners as banks are reluctant to take on the responsibility of screening exchanges.