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South Korea to act against unregistered crypto exchanges

Monday 22 August 2022 12:38 CET | News

The Korea Financial Intelligence Unit (KoFIU) has reported 16 virtual asset service providers to the investigative authorities for operating without the necessary registrations in the country.

According to the KoFIU, the 16 firms were found to have business operations with Korean clients, without obtaining a registration in the country. The activities conducted by these businesses include hosting and promoting Korean-language websites targeted at Korean consumers that allowed purchasing cryptocurrencies with credit cards. KuCoin, Phemex, and Poloniex were among the more extensive list of exchanges that are alleged to have operated illegally in the country.

The KoFIU said it had notified the foreign-based exchanges about the obligation to register with the Financial Services Commission in July 2021, but allegedly none of them did up to this date. Now the financial watchdog has threatened to take legal actions, including reporting the unregistered firms to the investigative authority, requesting the Korea Communications Commission and the Korea Communications Standards Commission to block domestic access to their websites, and employing credit card companies to block crypto purchases through their payments services.

 

The agency also said it would inform the relevant authorities in the countries where the subject exchanges are based about their illegal operations in Korea and forbid all registered entities from processing transactions and interacting with them. According to the statement, the exchanges representatives could face up to five years of imprisonment or civil penalties of up to USD 37.000 and a permanent ban from registering in the country.

Korean authorities began intensifying their probes in the domestic crypto industry after Terra’s USD 40 billion collapse in March 2022. The Seoul-based Terraform Labs, including its Korean co-founders, are also subject to a criminal investigation under suspicions of fraud.

Crypto regulation around the world

While Korea is fighting crime on its continent, in other parts of the world countries are still figuring out how to best adapt to the crypto surge. Recently, Australia has announced it will conduct a ‘token mapping’ exercise to identify how crypto assets and related services should be regulated and inform future regulatory decisions.

Aimed at being conducted before the end of the year, the exercise is expected to inform future regulatory decisions. The Treasury will also undertake work on recommendations including a licensing framework for crypto asset service providers dealing in non-financial product crypto assets, appropriate requirements to safeguard the consumer crypto asset custody, and a review of the decentralized autonomous organization (DAO) company-style structure.

On the other side of the world, Europe seems to be one step closer to a clear regulatory framework. The European Central Bank (ECB) has laid the foundation for the criteria it would be considering when harmonising the licensing requirements for crypto in Europe.

There is currently no harmonised regulatory framework governing crypto asset activities and services in the EU. This will change with the finalisation of several regulatory initiatives at European and international level that will lay down the broader regulatory framework under which crypto activities are allowed, and how banks should manage the risks they pose.

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Keywords: regulation, cryptocurrency, KYC, cryptocurrency exchange, blockchain
Categories: DeFi & Crypto & Web3
Companies: Korea Financial Intelligence Unit
Countries: Korea, Republic of
This article is part of category

DeFi & Crypto & Web3

Korea Financial Intelligence Unit

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