New Cryptocurrency Exchange Rules
By Foysal December 17, 2022
Cryptocurrencies are not regarded as legal money in South Korea, and exchanges, while legal, are governed by a strict regulatory framework. In South Korea, crypto taxing is a grey area: because cryptocurrency transactions are neither cash nor financial assets, they are now tax-free. The Ministry of Strategy and Finance, on the other hand, has stated that it is considering levying a tax on crypto transaction profits and plan publish a taxation framework in 2022.( 안전놀이터)
New Cryptocurrency Exchange Rules
South Korean cryptocurrency exchange laws are stringent, including government registration and other monitoring procedures by the Financial Surveillance Service of South Korea (FSS).
South Korean authorities banned the use of anonymous accounts in cryptocurrency trading and in 2017 banned the country’s financial institutions from hosting Bitcoin futures transactions, indicating that the ban was suspicious. In addition, the Financial Supervisory Commission (FSC) emphasized the reporting requirements for banks with crypto exchange accounts in 2018.
The new law restricts the trading of cryptocurrency to a “real bank account”, indicating that the seller (customer) must create a real account in the same bank as the seller of their cryptocurrency to deposit or withdraw money from their electronic wallet. . Based on standard AML/CFT regulations and standardized transaction reporting requirements, the bank and broker will verify the identity of the customer.
The South Korean government revised the law in 2020, extending anti-money laundering and counter-terrorism restrictions to all South Korean stock exchanges and requiring companies to obtain licenses to work with the South Korean government. . Financial Services Commission Financial Intelligence Unit from the end of September 2021. ( 안전놀이터)
What Are the Changes?
After the implementation of the new cryptocurrency law, before starting their business, all crypto service providers must update their AML/KYC procedures and register with the Korean Financial Supervisory Authority.
These laws are not entirely new; They were established by the Financial Services Commission (FSC) in 2018. Until recently, however, they did not need them: only the four major Korean exchanges — Bithumb, Upbit, Coinone and Korbit — accepted them. However, the amended law requires all Korean VASPs to comply with the following:
They will open a bank account and give consumers a valid account name with the same financial institution. They will implement an anti-money laundering/know your customer (AML/KYC) process based on a risk-based strategy, which includes customer due diligence and exposure of suspicious transactions. This requires technical solutions to share data of customers and business partners (FATF Regulation R.16 “travel”). Companies must obtain certification from the Korea Internet & Security Agency for Information Security Management System (KISA) (ISMS).
They will provide the Financial Intelligence Unit with company data (company name, representative name, company location and contact details) and bank details. ( 안전놀이터)
Future Cryptocurrency Regulations
South Korea has also stated that it will keep seeking to bring the business into compliance with the FATF’s anti-money laundering regulations in addition to the planned tax structure for cryptocurrencies. However, it is uncertain if the new regulations would ease, harden, or change associated laws on age limitations (for local consumers), access by international or anonymous traders (to withdraw funds from e-wallets), or cash withdrawals. In addition, in March 2021, South Korea will also reform its Special Payment Act to prohibit the usage of private coins on exchanges. ( 안전놀이터)
