Thirty-six virtual asset exchanges closed down on Friday after they failed to meet the Financial Services Commission’s (FSC) new standards for crypto businesses.

The FSC enacted the revised Act on Reporting and Use of Certain Financial Transaction Information on March 25, giving virtual asset operators six months to meet its new standards. Exchanges had until Sept. 24 or were to told to shut down, prompting last week’s mass closure.  

Industry experts previously warned that estimated losses of more than US$2.5 billion could occur due to the closings of the trading platforms.

But the FSC released a statement saying it expects the damage to be minimal. It revealed the 36 exchanges that closed down on or before the deadline count for only 0.01% of the Korean crypto market. The 36 had a combined cash deposits of some US$3.5 million on Sept. 21. The amount has been sharply downscaled compared to the same figure back in April, which exceeded approximately US$220 million. FSC’s statement added that the closing exchanges have been asked to return the deposits to their users within 30 days.

However, the FSC’s statement did not address damage from domestically developed cryptocurrencies disappearing along with closure of exchanges. Kim Hyoung-joong, the president of the Korea Fintech Association, pointed out that given only four of Korea’s largest exchanges survive the regulations, 42 tokens developed in the country will lose their platforms as they are listed only on exchanges that did not meet the new regulations.

Twenty-nine exchanges ended up surviving the deadline, which means the damage should be less than what was assessed before the deadline. Nevertheless, the exact number of affected tokens and the damage on their developers have not yet been determined by the authorities.

Meanwhile, South Korea continues its effort to institutionalize the crypto industry in the National Assembly, where the ruling democratic party and the opposing party both requested the CEO of Upbit to participate in an upcoming parliamentary audit sessions as a witness. 

On Sept. 26, members of the parliament’s National Policy Committee lawmaker Min Hyung-bae of the democratic party and Yun Chang-hyun of the opposing People Power Party nominated Lee Seok-woo, CEO of Upbit, as a witness.

Yun told CoinDesk Korea that the controversy over Upbit monopolizing the Korean crypto market will be discussed at the audit sessions, while Min says he will question Lee on Upbit’s delisting of cryptocurrencies and its subsequent damage on investors.

Upbit is so far the only cryptocurrency exchange to be registered under the Financial Intelligence Unit (FIU). Its daily trading volume accounts for 88.25% of all domestic exchanges, according to the data released by lawmaker Noh Woong-rae. The Fair Trade Commission of Korea, which adopts the Concentration Ratio (CR), stipulates that it is a monopoly when one market leader has a market share over 50% — meaning that the current virtual asset market is under Upbit’s monopoly.

Both the ruling and opposition parties will deliberate at the National Assembly’s plenary session on Sept. 29. Discussing the future of the crypto industry at the parliamentary audit sessions seems to be in preparation for the next legislation on the virtual asset industry, which is expected to further strengthen investor protection measures.