South Korean cryptocurrency exchange Huobi Korea has announced its closure, effective January 29, 2024, citing challenges in the business environment. The decision follows the disassociation of Huobi Korea from HTX (formerly Huobi Global) in January 2023. This move aligns with similar decisions by other smaller South Korean exchanges, including Cashierest and Coinbit in November, along with the suspension of trading services by CoreDAX due to reported financial difficulties.
Huobi Korea has assured its users that they will be able to withdraw their funds even after the shutdown, emphasizing a commitment to facilitating a smooth transition for its customer base.
The closure reflects a broader trend in the South Korean cryptocurrency market, where the top five exchanges—Upbit, Bithumb, Coinone, Korbit, and Gopax—command 99.6% of the total crypto trade volume, as reported by the Financial Services Commission (FSC) as of June 30, 2023.
South Korea’s stringent regulatory environment for cryptocurrency exchanges, introduced through a 2021 amendment to the financial reporting law, mandates these platforms to have a partnership agreement with a local bank to provide fiat-to-crypto services. This measure aims to mitigate risks related to money laundering and price manipulation. However, Huobi Korea and 20 other exchanges failed to secure such partnerships, restricting them to crypto-to-crypto trading.
Anticipated for enactment in July 2024, the upcoming “Virtual Asset Investor Protection Act” will impose additional responsibilities on cryptocurrency exchanges. These include maintaining 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.
