Korea to regulate cryptocurrency exchanges like banks

KFIU director Kim Geun-ik proposed stricter policies for both commercial banks and independent financial service providers.

Initially, the KFIU planned to impose new policies on large-scale financial institutions, retail investors, and traders in the public stock market and other sectors that currently have lenient AML and Know Your Customer (KYC) regulations. But, in later discussions, the KFIU has decided to include the cryptocurrency sector in its AML and KYC initiative.

The KFIU stated that the agency will coordinate with the Congress to pass a bill that would allow local financial authorities to monitor traditional bank account and cryptocurrency users extensively with transparency.

At the moment, cryptocurrency exchanges in South Korea can operate as a communication vendor, with a USD 40 license. As such, even the Free Trade Commission, the country’s regulatory authority for economic competition, does not have the authority to monitor and oversee crypto exchanges.

However, to prevent the utilization of cryptocurrencies like Bitcoin and Ethereum in underground economies and suspicious activities, the KFIU came to a consensus to recognize cryptocurrency exchanges as proper financial institutions and regulate them accordingly.