2023 South Korean Cryptocurrency and Travel Regulation Everything You Need to Know

The Ultimate Guide Understanding South Korea's 2023 Cryptocurrency and Travel Regulations

Source: AiYing Compliance

On June 30, 2023, the Financial Services Commission (FSC) of South Korea passed a new law aimed at ensuring user protection, transaction transparency, and market discipline in the cryptocurrency industry. This law will come into effect in 2024 and represents an important step by the government to establish digital asset infrastructure and regulatory framework.

Currently, Virtual Asset Service Providers (VASPs) in South Korea are regulated under the Act on Reporting and Using Specified Financial Transaction Information. This law has been in effect since March 2021. However, the existing regulations do not cover the regulation of unfair trading practices and the protection of assets and users. Furthermore, the FSC has pointed out that the current law does not allow the authorities to supervise and sanction VASPs more effectively, and assist victims in seeking remedies. The latest law passed in 2023 aims to fill these gaps.

To help companies engaged in virtual asset business in South Korea adapt to the new regulatory framework, we have prepared this guide.

Who is affected?

Virtual Asset Service Providers in South Korea must comply with cryptocurrency regulations. This includes institutions that provide the following services:

Buying and selling virtual assets

Exchanging virtual assets with other virtual assets

Transferring virtual assets for the purpose of purchasing, exchanging, storing, or managing virtual assets

Storing or managing virtual assets

Acting as intermediaries or representatives for sellers and exchange providers for mediation or agency

Other virtual asset-related activities that are likely to be used for money laundering and terrorist financing, as specified by presidential decree

Who are the regulatory bodies?

The Financial Services Commission (FSC) of South Korea is the primary regulatory body responsible for policy-making. Under the 2023 law, the FSC has the authority to supervise and inspect VASPs, and impose penalties on them.

Another important institution is the Korea Financial Intelligence Unit (KoFIU), which is established under the Act on Reporting of Financial Transaction Information. KoFIU serves as a bridge between financial institutions and law enforcement agencies, and is responsible for receiving suspicious transaction reports (STRs) submitted by financial institutions, analyzing them, and forwarding them to the relevant law enforcement agencies.

VASPs working with South Koreans must submit reports to KoFIU in order to operate legally (i.e., register) in the country.

What are the regulations?

The Act on Reporting and Using Specified Financial Transaction Information is the main law regulating VASP activities, and it brings VASPs within the scope of regulated entities. VASPs must comply with anti-money laundering (AML) regulations. This means that all VASPs, including foreign VASPs, must report their business activities to KoFIU before conducting business.

In terms of reporting (registration), the following information must be submitted to KoFIU:

Company name and its representative

Matters specified by presidential decree, such as the location and contact information of the place of business

If VASP meets one of the following conditions, KoFIU may not register the VASP:

Failure to obtain certification for Information Security Management System (ISMS) – Failure to meet capital requirements

The major shareholders or senior management of the institution are involved in money laundering or terrorist financing activities

The institution is unable to provide necessary documents or proof

In addition, the new law also stipulates the following:

VASPs must implement real-name verification to ensure user identity verification and KYC (Know Your Customer) procedures.

VASPs must establish and maintain internal controls and compliance mechanisms to monitor and prevent money laundering and terrorist financing activities.

VASPs must regularly report their transaction and customer information, including Suspicious Transaction Reports (STRs).

VASPs should cooperate with the Financial Intelligence Unit (KoFIU) by providing requested information and assistance.

Punishment and Consequences

VASPs that violate regulatory provisions may face a range of penalties, including fines, suspension of business, and revocation of licenses. Moreover, individuals involved in violating anti-money laundering and anti-terrorist financing regulations may face criminal charges and penalties.

VASPs must cooperate with regulatory authorities and ensure their compliance procedures meet regulatory requirements to avoid possible punishments and legal consequences.

Editor’s Recommendation

The new law passed in 2023 aims to strengthen regulation of the cryptocurrency market in South Korea and ensure user and asset protection. VASPs must comply with the new laws and regulations, including real-name verification, KYC procedures, reporting, and compliance requirements. VASPs that fail to comply with the regulations may face severe penalties and legal consequences. If you are a company engaged in virtual asset business in South Korea, it is recommended that you familiarize yourself with the new regulatory provisions and take necessary measures to ensure compliance.

We will continue to update Blocking; if you have any questions or suggestions, please contact us!

Share:

Was this article helpful?

93 out of 132 found this helpful

Discover more

Blockchain

Guide to landing Web3.0 in Hong Kong Cyberport: How to receive a subsidy of 1.3 million and a free office?

If you want to establish a Web3 enterprise, how can you smoothly settle in Cyberport and obtain subsidies exceeding o...

Blockchain

The US SEC re-examined the Bitwise Bitcoin ETF proposal. When was the first encrypted ETF approved?

According to Cointelegraph, on November 19th, the US Securities and Exchange Commission (SEC) is reviewing its last r...

Market

Galaxy Research How big is the market size of Bitcoin ETF? What other widespread impacts does it have on Bitcoin?

Author | Charles Yu Translation | Colin Wu Original Link https//www.galaxy.com/insights/research/sizing-th...

Blockchain

Jimmy Song: All those who are not optimistic about Bitcoin will eventually escape the "true incense" theory.

Bitcoin developer Jimmy Song said in an interview yesterday that the Bitcoin ETF does not need to exist. In addition,...

Bitcoin

ETF game involving bulls'? Cointelegraph's unbelievable blunder on 'Black Monday

At 921 pm on October 16th Beijing time, the official account of cryptocurrency media Cointelegraph suddenly tweeted B...

Blockchain

Conference Guide ETH Hong Kong Opening Countdown! Overview of Surrounding Activities Schedule (Continuously Updated)

ETH Hong Kong will be held from October 22 to 24. This article summarizes the participation guide for the inaugural E...