Once again crypto trading regulations in South Korea are mounting up with a new wave of positivity. The government has chosen to indirectly regulate virtual currencies through banks. The stipulated framework has been designed by the South Korean Financial Services Commission (FSC) is preconditioned but acceptable for sustaining the legitimacy of trading.
South Korea is considered the second market, after Japan, for crypto trading.And itis likely to echo around the globe as these two countries often dictate and direct the trend in the crypto ecosystem. The ability to trade a range of altcoins using fiat (KRW) puts South Korea above many other countries where only the major two or four crypto assets are available in fiat (usually BTC and ETH only).
The prevention guidelines and regulations on Know Your Customer (KYC) requirements and Anti-Money Laundering (AML) protocols provide an optimistic framework for crypto-exchanges along with which were earlier involved in hefty hacks like Bithumb.
We can clearly sense that South Korea’s volte-face on crypto regulation is likely to be beneficial to all regional players. While bridging the gap between crypto trading platforms and ICO’s, the new regulation could be establishing a new, optimistic framework for other nations. Smaller players such as Vietnam, Indonesia, and the Philippines are also warming up to follow South Korea and Japan’s burgeoning industries.
The national financial watchdog for local crypto trading activities, the Korea Financial Intelligence Unit (KFIU), is requested by the FSC to tighten-up and rearranged the existing crypto regulations along with the new enforcement on transactions and user monitoring exercises.
FSC published a press release this week saying it went to investigate three large banks: Nonghyup, Hana Bank and Kookmin.All three are involved in providing banking services as well as virtual accounts to cryptocurrency exchanges.
Now cryptocurrency exchanges will be required to conduct Customer Due Diligence as well as Enhanced Customer Identification exercises. CNN News wrote that the South Korean crypto exchanges will be required to perform sufficient background checks to ensure that foreigners are not using local cryptocurrency exchanges to buy and sell digital assets. Additionally, the exchanges will have to ensure that criminals are not using personal accounts of individuals to launder money as well as to prevent suspicious transactions and payment processing.
The new policies along with the request from the government to improve the AML and KYC systems of local cryptocurrency exchanges have demonstrated the willingness of the government of South Korea for cryptocurrency regulation, even at the risk of the public acknowledging the decision as an intent of legitimizing (or de-centralizing) the local cryptocurrency sector.
It is worthwhile to see that government is imposing the policies to prevent the re-emergence of the infamous “Kimchi Premium,” or arbitrage opportunities,by spotting suspicious fund movements in and out of cryptocurrency exchanges and banking accounts connected to crypto exchanges. If banks have a reason to believe that a user or an organization are transferring large sums of capital for the sole purpose of taking advantage of the “Kimchi Premium” in South Korea, authorities can investigate the user or the organization to prevent any fraudulent activity.