| Binance CEO Changpeng Zhao / Reuters-Yonhap |
By Lee Min-hyung
Binance, the world's largest crypto exchange, is facing difficulties in its expansion in Korea, as financial authorities have not granted approval for the company's acquisition of the nation's fifth-largest exchange, GOPAX.
Binance took over Streami, the operator of GOPAX, in early February. The Chinese crypto exchange has since struggled to win a final license as a virtual asset service provider (VASP) here.
The Financial Intelligence Unit, which handles the matter, is delaying its screening, urging GOPAX to submit more legal documents and demanding Jeonbuk Bank, which partners with GOPAX, engage in additional risk evaluation.
Reflecting on the slower-than-expected approval, Binance replaced top management of GOPAX multiple times this year alone. However, it still failed to make progress regarding its communication with the regulator.
Industry sources said Korean authorities are likely to maintain their conservative stance on the Chinese capital's expansion here.
"Korean financial watchdogs have remained negative in allowing Chinese crypto firms to operate their businesses here, so it will be tough for Binance to receive the license without regulators' drastic change of stance," a crypto industry source said.
The source also said Korea is on track to tighten regulatory guidelines all across the crypto industry, so Binance is unlikely to expand its footing here for the time being.
This contrasts with the status quo in the Japanese crypto industry. Japanese authorities only a couple of years ago also remained negative as to the overall crypto industry and Binance's inroads into the country.
But the Japanese government shifted its stance recently, offering drastic tax benefits to crypto business operators.
Last month, Binance announced the official launch of Binance Japan, speaking highly of Japan's regulatory environment.
"No one can say for sure whether Korea will also be able to follow in the footsteps of Japan with its crypto regulatory stance, but this appears not to come into reality for now," the source said. "Korea is an attractive market for overseas crypto exchanges, as the country's crypto trading volume is standing at the top level in the world."
According to data from crypto data tracker CCData, the trading volume of Upbit ― Korea's dominant crypto exchange ― was second-highest in the world in July, reaching up to $30 billion (39.7 trillion won). Binance retained its top position during the same period.