Huobi Korea, a South Korean cryptocurrency exchange, has announced it will cease operations on January 29, citing a challenging business environment. Despite the closure, users will still be able to withdraw funds from the exchange. Established in 2017, Huobi Korea had previously severed ties with its former global entity, HTX, in January 2023.
The shutdown follows the closure of other small South Korean crypto exchanges, including Cashierest and Coinbit in November, and the suspension of services by CoreDAX, which postponed its operations for several months. The top five exchanges in South Korea—Upbit, Bithumb, Coinone, Korbit, and Gopax—currently hold 99.6% of the total crypto trade volume in the country, having successfully registered with local financial regulators.
South Korea enforces strict standards for local crypto exchanges, which require partnerships with local banks to offer fiat-to-crypto services. These partnerships help minimize money laundering and price manipulation risks. However, 21 exchanges, including Huobi Korea, failed to secure a bank partnership, only meeting minimum information security requirements and were thus limited to offering crypto-to-crypto transactions.
Of these 21 exchanges with limited offerings, 10 failed to generate revenue from crypto transaction fees in the first half of 2023, according to a report by the Financial Services Commission (FSC). South Korea is expected to implement the Crypto Asset Investor Protection Law in July this year, which will impose additional responsibilities on exchanges to protect user funds, including keeping 80% of user funds in cold storage and ensuring compensation for users in case of hacks or system failures through registered insurances.