A number of South Korean crypto exchanges are ceasing policies that see them share order books with overseas exchanges in preparation for the promulgation of a new crypto law that comes into force early next year.
As reported, a series of amendments to a financial law will take effect in March, and is set to transform the way exchanges (previously unregulated) go about their business. As well as multiple banking-related regulations, the terms of the amendment specify,
“Cryptoasset providers may not allow customers to trade [tokens] with the customers of other cryptoasset providers through alliances.”
However, order book sharing with international exchanges is a common practice among South Korean exchanges, and this regulatory headache is just one of the many that has many smaller exchanges contemplating their very survival.
Others have decided to move fast ahead of the legal change, ending their order book sharing deals before 2020 is out.
Per Decenter, on Monday, the Aprobit exchange announced it was ending its order book sharing policies with the Bitfinex platform, although Aprobit claimed it would continue to do other forms of business with the firm.
Huobi Korea has also stated that it will stop its order book sharing with its parent company, Huobi Global, in accordance with the new law.
However, others are less keen on the policy and would prefer to bide their time while organizations such as the Korea Blockchain Association prepare legal challenges or lobby for a late amendment to the new ruling. The association and a number of its most prominent members are thought to believe that the rule will provide an unfair restriction of trade for domestic exchanges.
The same media outlet quoted a spokesperson for the Korea Digital Exchange – the firm that operates the Flybit exchange – as stating that the trading platform is “preparing plan to stop sharing our order books if it becomes a problem,” but will wait to see on the result of the association’s bid to reverse the ruling.
Flybit currently has an order book sharing deal in place with international exchange giant Binance.
Some exchanges have claimed that the block on order book sharing is nonsensical as they believe they can comply with good banking practices without needing to end their dealings with overseas exchanges and their order books.