South Korea Cracking Down on Illegal Crypto Transactions

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In Brief
  • South Korean officials announce interagency crackdown to eliminate crypto-related financial crime.

  • Agencies and regulators involved include the Financial Services Commission (FSC) and the Financial Intelligence Unit.

  • Korean government alarmed by the cryptocurrency market's volatility.

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Officials in South Korea have announced that there will be “no illegal cryptocurrency transactions” in the country moving forward.

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This follows a meeting on Monday wherein authorities planned to eliminate the use of crypto for money laundering and other financial crimes.

These authorities include the Financial Services Commission (FSC), the Ministry of Justice, the National Police Agency, and the Ministry of Strategy and Finance.

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Reports indicate that the government plans to roll out a set of regulations to help trace such transactions. Building on the strict law that came into effect last month. Namely, the Act on Reporting and Using Specified Financial Transaction InformationA law under which virtual assets service providers (VASPs) must verify the identity of their users.

The crackdown, set to continue until June, will involve a number of South Korean agencies and regulators. This includes the Financial Supervisory Service, and the Financial Intelligence Unit, a state-run agency dedicated to investigating financial crime.

Failure to report any suspicious transactions will result in heavy fines to any digital exchanges involved.

According to reports, it’s the cryptocurrency market’s volatility that alarms the government the most. Monday’s meeting and the subsequent decisions made come in the wake of recent soaring crypto prices. Bitcoin (BTC) alone hit a new all-time high of over $64,000 last week. However, it flash crashed to the $51,600 mark a few days later.

They will be placing special attention on foreign investors, particularly those based in China. This decision comes in the wake of speculation that foreign investors have had increased interests in South Korea’s exchanges, and that such investments have grown.

The Crypto Crackdown in South Korea

This is not the first news of a crackdown in South Korea this year. Aside from the aforementioned Act on Reporting and Using Specified Financial Transaction Information, some South Korean exchanges were insisting on proof of identity from as early as February.

Korbit, a prominent exchange in South Korea, was withholding users’ ability to withdraw funds until they provided proof of ownership.

More recently, another exchange, OKEx, stopped operating in South Korea earlier this month. It announced its closure in the country back in March, citing the strict anti-money laundering laws imposed by the FSC as the reason.

So far, reports indicate that OKEx is the only exchange to cease operations for such reasons.

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Dale Hurst is a journalist, presenter, and novelist. Before joining the Be In Crypto team, he was an editor and senior journalist at a news, lifestyle and human-interest magazine in the UK. Cryptocurrency was one of the first subjects he specialized in when first going freelance in 2018, reviewing exchanges and analysing lawsuits.

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