South Korea Plans Virtual Asset Exchange Inspections to Expel Ineligible Platforms

South Korea to Conduct Virtual Asset Exchange Inspections in Order to Remove Ineligible Platforms by the End of the Year.

South Korea intends to stop unlicensed cryptocurrency exchanges.

Last updated: February 12, 2024 04:24 EST | 1 min read

Shalini Nagarajan

South Korea is taking measures to strengthen its regulation of the virtual asset exchange market. The Financial Intelligence Unit (FIU) recently released a “2024 Work Plan” aimed at expelling ineligible platforms and preventing unauthorized exchanges from accessing the Korean won market. Let’s dive into the key details and explore the implications of these actions.

Advanced Suspension System to Prevent Concealment of Illicit Funds

In an effort to clamp down on illicit activities, authorities are contemplating the implementation of an advanced suspension system for suspicious transactions. This system would rapidly prevent the concealment of illicit funds at every stage of the investigation process. By doing so, South Korea aims to establish a more secure and transparent virtual asset exchange market.

Collaboration with Experts, Lawyers, and Accountants

To effectively carry out these inspections, the FIU plans to enlist the help of experts, lawyers, and accountants. Their expertise will play a crucial role in strengthening screening procedures and anti-money laundering checks. With their involvement, ineligible exchanges that are currently operating will be identified and removed from the market to ensure a safer trading environment.

Mid-Year Check and Policy Recommendations

In the first half of 2024, a preliminary check will be conducted to assess money laundering risks and evaluate the overall market operation. A more detailed check will follow in the second half of the year, during which any virtual asset operators that fail to meet the standards will be expelled. This thorough evaluation process will enable regulators to take necessary actions and maintain the integrity of the virtual asset exchange market.

Broadened Scope and Social Credit Criteria

The review process will be expanded to include major shareholders of virtual asset exchanges. Additionally, the law’s scope will be broadened to disqualify individuals with a history of violations, taking into account social credit criteria, such as debt default. By considering these factors, South Korea aims to ensure that only reliable and compliant platforms remain in the market.

Introducing the Financial Action Task Force (FATF)

In order to swiftly identify crimes and prevent suspicious transactions during pre-prosecution investigations, the FIU suggests implementing the Financial Action Task Force (FATF). This international organization specializes in combating money laundering and terrorist financing. With its expertise and guidance, South Korea can enhance its regulatory efforts and effectively safeguard the virtual asset exchange market.

South Korean Officials Required to Disclose Crypto Holdings

South Korea holds a prominent position in global crypto trading, with major exchanges such as Upbit, BitHumb, CoinOne, Korbit, and Gopax operating within the country. To ensure transparency and combat potential conflicts of interest, high-ranking public officials in South Korea will be required to disclose their cryptocurrency holdings starting this year. This decision was prompted by the Coin Gate political scandal, which involved a crypto-related parliamentary committee lawmaker accused of trading coins using insider information.

Q&A: Addressing Key Concerns

Q: What are the implications of South Korea’s plan to expel ineligible virtual asset exchanges?

A: South Korea’s plan is aimed at enhancing regulatory oversight and promoting a more secure trading environment. By removing ineligible platforms, the country can mitigate the risks associated with money laundering, fraud, and other illicit activities. This initiative will protect investors and ensure the long-term stability of the virtual asset exchange market.

Q: How will the collaboration with experts, lawyers, and accountants contribute to the inspection process?

A: The involvement of experts, lawyers, and accountants will bring specialized knowledge and skills to the inspection process. Their expertise in screening procedures and anti-money laundering checks will enable the identification and removal of ineligible exchanges. This collaboration will strengthen the regulatory framework and improve the overall integrity of the virtual asset exchange market.

Q: How will the requirement for South Korean officials to disclose their crypto holdings impact the cryptocurrency landscape?

A: Requiring high-ranking public officials to disclose their crypto holdings is a step toward transparency and accountability. It aims to prevent potential conflicts of interest and ensures that officials are not involved in any misconduct related to cryptocurrencies. This measure will contribute to building trust in the government’s regulatory efforts and foster a more trustworthy cryptocurrency ecosystem.

Looking Ahead: Future Outlook and Investment Recommendations

South Korea’s commitment to strengthening its regulatory framework for virtual asset exchanges is a positive signal for the industry. By implementing advanced suspension systems, collaborating with experts, and expanding the review process, the country is positioning itself as a leader in safe and compliant cryptocurrency trading.

Investors should closely monitor these developments as they can have a significant impact on the performance of virtual assets. It is advisable to consider investing in platforms that prioritize security, compliance, and transparency. By doing thorough research and staying updated on regulatory changes, investors can make informed decisions and navigate the evolving cryptocurrency landscape.

References

  1. Yonhap News: Financial Intelligence Unit’s 2024 Work Plan
  2. Blockchain News: South Korea Crypto Market Share
  3. CoinDesk: New Rules for South Korean Crypto Firms
  4. [Twitter: @CryptoSeanLee](https://twitter.com/CryptoSeanLee/status/1756681244577030368?ref_src=twsrc%5Etfw)
  5. Google News

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