chaintimes.com
South Korea’s Financial Services Commission has moved to ban cross-trading on crypto exchanges in the country. The move is part of a raft of amendments to the country’s Act on the Reporting and Use of Certain Financial Transaction Information. Cross-trading is an illegal practice in many jurisdictions that involves offsetting buy and sell orders for the same asset (at the same price) without recording the transaction on the order book.
Crypto exchanges push back the proposal.
According to a report by local media outlet Newsis, crypto exchange operators in South Korea have bemoaned the planned prohibition stating that the move would cause significant disruptions to their already strained operations. According to some South Korean crypto exchange operators, the planned move would choke the flow of funds into their platforms. Crypto exchanges in South Korea reportedly cross-trade to enable them to convert fees charged in crypto to Korean won (KRW). “In order to convert the cryptocurrency received as a fee into KRW, you have no choice but to sell the cryptocurrency at your place of business,” an industrial official noted.
The proposed ban could eliminate the revenue from trading fees.
A ban on cross-trading would, in theory, prevent platforms from being able to transmute these fees from crypto to fiat currency. In effect, the planned ban could mean compulsory zero-commission trading, eliminating the revenue that would have been earned from trading fees. If local reports are to be believed, South Korean crypto exchanges will be forced to create a new business to convert trading fees to fiat currency. However, such a move would come with significant cost implications as the country’s Anti-Money Laundering policies would make such a venture expensive to operate.