Korea to regulate Cryptocurrency Exchanges like Legitimizing Industry and Commercial BanksJune 30, 2018
The local financial agencies together with the Korea Financial Intelligence Unit (KFIU) will regulate cryptocurrencies exchanges on banks. The said regulation plans to impose a strict anti-money laundering (AML) policies. That is to ensure criminals do not utilize cryptocurrencies to finance their illegal operations.
Kim Geun-ik, the KFIU director led an extensive discussion on the money laundering financing and laundering prevention rules. It happened during the meeting on Policy Advisory Council held last week. Throughout the discussion, the council also proposed a strict policy for both the independent financial service providers and commercial banks.
At the time, the Korea Financial Intelligence Unit also planned to impose the new policies on retail investors, traders, large-scale financial institutions and other sectors that presently have lenient and the Know Your Customers (KYC) regulations.
Later in the discussion, the KFIU decided to comprise the cryptocurrency sector on its KYC and AML initiative. The Korean Unit also stated that the agency would coordinate with the country’s Congress to pass a bill. That will allow the local financial authorities to closely monitor the traditional bank account as well as the users extensively with the transparency.
The regulation could also prove similar action done by Japan. At the moment, the South Korean crypto exchanges can operate as a communication vendor, with a $40 license. Moreover, the country’s Free Trade Commission does not have the authority to oversee and monitor the crypto exchanges. The KFIU came to a consensus to recognize crypto exchanges as proper financial organizations. It is to avert the utilization of cryptocurrencies like Ethereum and Bitcoin in the suspicious activities and underground economies,
According to a KFIU spokesperson, under the current regulations, there are clear limitations in avoiding money laundering on cryptocurrency exchanges That’s because it is the only way for the authorities to spot suspicious transactions is through the banks. The spokesperson also added that if the bill of Jae Yoon-Kyung passes, this will be the time for the local authorities to impose regulations on the crypto exchanges which are being implemented on commercial banks.
If the bill of the lawmaker Jae Yoon passes, all the crypto exchanges will be regulated as proper financial institutions and commercial banks. A significant sum of capital from individual traders and retails investors has been ejected into the crypto market since 2017.
The acknowledgment of the crypto industry as an accurately financial market will be essential for the global cryptocurrency market in the long-term. As a properly regulated market, this will improve the mainstream adoption of cryptocurrencies considerably.