South Korean regulating authorities are now asking financial institutions such as banks to provide full details of their cryptocurrency businesses, and in particular their dealings with cryptocurrency exchanges in the country. The news comes as South Korean authorities attempt to investigate illegal activities in the cryptocurrency sector.
According to media reports in the country, South Korean financial regulators are demanding that banks provide full information on their dealings with cryptocurrency exchanges and how they are monitoring them.
In a story reported in the Korea Herald this morning, it was explained that the task was a lot more difficult than might be imagined.
“Currently, cryptocurrency exchanges can operate without permission from the government, which is why it is difficult to identify the exact number of cryptocurrency exchanges,” said an official at a local cryptocurrency exchange who asked to remain anonymous. “One way to find out is to track corporate bank accounts that collect customers’ funds.”
It appears that a main thrust of the investigation is to find the exact number of cryptocurrency exchanges operating in the country. Currently, the hazy estimate of between 100 to 200 exchanges is the only figure available.
Once the financial authorities have the complete list of exchanges, they can then impose sanctions on those that are unregistered. The exchanges have a period of grace until September 24 in which to be registered. This is when a new law on “Reporting and Using Specified Financial Transaction Information” comes into force.
The new law will require cryptocurrency exchanges to have information security management systems in place and to form partnerships with banks.
Crypto exchanges that fail to comply with these demands look out – the sanctions are very strict and include “a jail sentence of up to five years or a fine of up to 50 million won ($44,000)”.
As also reported in the Korea Herald, the government crackdown on crypto led to a recent police raid on an exchange called V Global, resulted in the exchange’s funds being frozen. V Global is accused of running a Ponzi scheme which attracted 1.7 trillion won in customer funds.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.