South Korea has been a crypto-friendly territory thus far. However, in the last few days, concerns over crypto’s legal and financial impact on the economy have started to cause unrest. The government of Seoul is in the process of formulating and introducing austere regulations for cryptocurrencies in the region. The focal point of this legal streamlining is the banking sector.
The banking association of South Korea is also planning to host a seminar to study the impact of liability and high-risk trading while serving crypto traders. Meanwhile, the weight of the regulatory burden from South Korean regulators falls on the shoulders of local crypto exchange platforms. After these changes take place, the banks servicing retail and commercial crypto trading would have to comply with the new code of practice.
South Korean Exchanges Need to Make the Compliance of KYC a must for Staying in Business
Financial Services Commission (FSC) is a stock regulatory body in South Korea. Last Sunday, FSC instructed all banking units under its jurisdiction to markdown crypto trading accounts as high-risk. The regulatory body also directed banks to introduce and implement saturated KYC (Know Your Customer) protocols. Criminal prosecution might be declared later on for the violation of these guidelines.
In addition, South Korean banks are also liable to report any transaction spanned on a huge magnitude and suspicious origin to the commission. Before the banks proceed to enter into a legal partnership with the miscellaneous crypto exchange, they are required by law to comply with the instructions provided by FSC. A recent article published in Korean Times declares that the banking sector in South Korea is also looking for ways to mitigate the risky transactions and trading for crypto exchanges.
Financial Intelligence Units and Financial Action Task Force would be Directing the New Wave of Crypto Regulations in South Korea
An anti-money laundering agency, KoFIU, would be supervising the banks to ensure that the new crypto guidelines by FSC are implemented comprehensively. Korean Financial Intelligence Unit or KoFIU has made it mandatory for the crypto exchange platforms in the region to apply for registration. The period given to the crypto exchanges is up until Sep 2021. Once the exchanges are registered, they would be closely monitored for three months before getting a clearance.
As per reports of KoFIU, only four out of 60 platforms for crypto trading are asking for real-name verification. In recent times, the kimchi premium has raised its head once again from the trenches. It has added a heavy burden of 26% additional costs for the price of the altcoins in the regional markets. There are also concerns about weeding out lower cap altcoins in favor of top ten crypto performers. Under these circumstances, FATF has called for a better KYC implementation and screening of suspicious transactions.