Paycoin seeks reapproval after Korea suspends payment token

PayProtocol, the South Korean issuer of payments-focused cryptocurrency Paycoin (PCI), will reapply for a local license to stay in business after the financial authority ordered the suspension of its business, the company announced on Monday, according to local media reports.

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Fast facts

• Paycoin was developed under Danal Fintech Corp. and emerged as one of the most used payment tokens in South Korea since it launched in 2019. The token can be used for commercial trade at Pizza Hut, Burger King, 7-Eleven and Park Seung Chol Hair-Studio.
• On Jan. 6, 2023, South Korea’s Financial Intelligence Unit (FIU) rejected Danal-backed PayProtcol’s application to register as a provider of crypto trading services, as the project did not have a banking partner as mandated by local laws.
• A local bank must provide users with real-name withdrawal and deposit accounts and assist in the prevention of money laundering for a crypto business to offer fiat-to-crypto transaction services. 
• PayProtocol registered itself as a digital asset wallet provider last year, but the financial authorities requested to register as a crypto trading platform, as the FIU interpreted Paycoin transactions as an indirect exchange of crypto and fiat.
• PayProtocol told local media that the regulators requested the project to secure a bank partnership five months after it submitted its application in May last year, claiming that the project only had two months to seek a new deal. 
• PayProtocol was ordered to shut down its services and notify its users by Feb. 5. The company requested a deadline extension, which was not approved by the FIU.
• “The best measure PayProtocol can take to stop the service suspension and protect users is to reapply for the license by acquiring the bank partnership by Feb. 5,” Ryu Ik-dun, chief executive officer of PayProtocol, told local media outlets on Monday.
• Following the FIU announcement, five fully licensed crypto exchanges in South Korea — Upbit, Bithumb, Coinone, Korbit and GOPAX — have marked Paycoin as a cautionary investment. On Bithumb, the price of PCI has fallen 36% since the announcement to currently trading at 197.7 Korean won (US$0.16).

See related article: S. Korea’s Busan city crypto exchange moves ahead without global partners