South Korean financial regulators are planning to align the country with widely adopted FATF global guidelines by directly regulating crypto exchanges in the country under a licensing regime, Business Korea (BK) reports.
The new FATF guidelines require crypto exchanges to report transactions that exceed a certain amount and to assure that both parties to a transaction have been identified.
Until now, Korea’s Financial Intelligence Unit (FIU) has exerted indirect influence over the sector by issuing policy and conduct guidance to the banks that service crypto exchanges.
The new licensing system is designed to promote transparency in the otherwise deliberately murky world of crypto transacting, and the FIU’s head of administration and planning, Tae-hoon Lee, is also seeking a complementary amendment to the country’s financial reporting laws:
“If an amendment to the Act on Reporting and Use of Certain Financial Transaction Information, which reflects the FATF’s international standards for cryptocurrencies, passes the National Assembly, it will be possible to prevent money laundering through cryptocurrencies.”
In fact, direct oversight seems to depend on the amendment:
“If the amendment is approved by lawmakers, we can raise the effectiveness of regulations by shifting from the current indirect regulation through commercial banks to direct regulation.”
Another part of effectively regulating the sector will be requiring crypto exchanges to maintain the same level of “real name” standards required of banks, BK says.
Under current Korean laws, banks can only issue accounts to individuals who have proven their identities and who have registered the accounts using their legal names.
There have been stories that some of the Korea’s crypto exchanges were skirting real name requirements by batching together and running many clients’ funds through single name accounts at banks.