The cryptocurrency industry is in turmoil as South Korea's Financial Supervisory Service (FSS) mandates that even defunct exchanges must uphold their obligations to protect users. Under the Virtual Assets Act, exchanges are required to purchase insurance with a minimum compensation limit of KRW 500 million or accumulate reserves. This requirement poses a significant burden on exchanges that have shut down due to financial difficulties.

Several exchanges, including Coinbit, Casherest, and Huobi Korea, have officially closed but must maintain their virtual asset business status until the year's end. Many of these exchanges are undercapitalized, struggling to afford the annual insurance premiums of around KRW 50 million. Additionally, there's confusion about whether insurance is still required after user deposits have been returned.

The FSS is aware of the challenges and plans to address individual cases flexibly. However, this situation underscores the difficulty of balancing industry regulation with investor protection, highlighting the need for ongoing dialogue between financial authorities and the industry.

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