South Korea to review encrypted currency exchange regulatory proposals

nRunaway Comment: In August, the Democratic Legislative Council of South Korea submitted a bill to amend the Electronic Finance Transaction Act, suggesting that related parties such as the cryptocurrency exchange must obtain a permit from the Korea Financial Services Commission. The Committee held a meeting and pointed out that the confidential currency involved illegal activities and announced the anti-money-laundering policy to prevent money laundering in encrypted currencies. And South Korea’s Prime Minister also expressed concerns about cryptocurrencies in the day’s meeting, saying that research should be conducted immediately.n
nTranslation: Annie_Xun
In response to the Bitcoin Regulation Act submitted by lawmaker Park Yong-jin, the Financial Services Commission (FSC) of Korea made a final adjustment to the regulatory proposals for crypto currency exchanges. At the same time, the prime minister is very worried about the growth and risk of cryptocurrencies such as Bitcoin and calls for immediate action.n
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Requirements for crypto currency exchangen


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Hankyoreh reports that the legislative bill “would treat the operations of cryptocurrencies (such as Bithumb, Coinone and Korbit) as unauthorized financing.”n
Cryptocurrencies exchange currently belongs to Act on Consumer Protection in Electronic Commerce Transactions. Media reports explained that this means “anyone who registers as an online provider can not operate a cryptocurrency business using the ecommerce site model.” “Although the FSC identified cryptocurrencies as not financial instruments but as unauthorized financing models, they admitted that they were traded globally.” The news indicates that the commission plans to have the exchange operate under certain terms. A FSC official explained in detail:n
n”Encrypting currency exchanges will need to comply with consumer protection standards such as independent storage of client assets and increased transparency, such as customer identification processes.” The relevant rights bodies have the authority to prosecute exchanges that violate these regulations. “n
nIn August, Democratic lawmaker Park Yong-jin filed a proposal to amend the Electronic Financial Transactions Act. He proposed that anyone involved in the digital money business, including cryptocurrencies exchange operators, must obtain FSC clearance.n
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Anti-money laundering measuresn
Nspna reports that FSC also held a meeting at the National Federation of Banks to announce its anti-money laundering policy. Over 200 officials attended the meeting, including law enforcement agencies and representatives of the Korean Customs Service.n

FSC Vice Chair: Kim Yong-beomn
The meeting announced four anti-money laundering policies, including measures to prevent money laundering in Bitcoin. The report quoted Kim Yong-beom, vice chairman of FSC as saying: “We will build a binding system based on the risk of money laundering in new products to improve the security of financial transactions.”n
In a Yonhap News report, he explained, “We will devise a thorough response to prevent encrypted currencies such as bitcoin from becoming a new source of money laundering.”n
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Prime Minister’s concernsn
Yonhap news agency reported on the day of the meeting, at the South Korean cabinet meeting held in the Seoul government building, Prime Minister Lee Naiya (Lee Nak-yeon) expressed concerns about cryptocurrencies.n
He referred to drug smuggling and pyramid selling involving cryptocurrencies. “It’s time to investigate this problem.”n
n”The virtual currency is speculative, the Bitcoin price has exceeded 11 million won and the transaction volume has surpassed Kosdaq. I feel that if I ignore it, there will be serious distortions and anomalies.”n
nLi Luoyuan further stressed that “fundamentally, the issues of Bitcoin and virtual currency need to be considered.” And mentioned that FSC is already discussing this topic with several cabinet departments. “There is a need for a thorough analysis of ICO and cryptocurrencies.”n

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