A recent report has revealed that the number of registered virtual asset service providers in South Korea has dropped by 26% since last year, with smaller crypto exchanges facing challenges related to regulatory compliance and banking access. According to the Financial Intelligence Unit, there are now only 31 registered crypto trading firms in South Korea, down from 42 last year.

The closures have affected several well-known exchanges, including GDAC, ProBit, Huobi Korea, and Bitrade. Most of the exchanges that left the market were token-only platforms without fiat support, making it difficult for them to attract users and stay in business. Without real-name bank accounts and fiat trading options like the U.S. dollar or Korean won, these platforms struggled to survive, with over 90% of them experiencing complete capital erosion last year.

In addition to business hurdles, many platforms failed to renew their registrations, leading to their exclusion from the nation’s registry. Some exchanges, such as Qubit and Coinbit, eventually shut down as a result. The report also warns that the number of crypto exchanges in South Korea may continue to decline, as some firms still on the list have announced plans to exit, while others are shifting their focus to overseas markets due to regulatory uncertainty.

The challenges faced by South Korean crypto exchanges highlight the importance of clear regulations and access to banking services in the cryptocurrency industry. As the market continues to evolve, it will be crucial for exchanges to adapt to changing regulatory environments and find ways to attract and retain users in order to remain competitive.