Overview: South Korea is ramping up efforts to regulate virtual asset exchanges, aiming to tighten scrutiny and block non-compliant platforms through a comprehensive strategy outlined by the Financial Intelligence Unit (FIU). The initiative, part of the “2024 Work Plan,” reflects a commitment to international standards and aims to bolster anti-money laundering (AML) protocols while safeguarding the Korean won market from unauthorized exchanges.
Key Measures:
- The FIU’s strategy includes consultations with experts and plans to enlist legal and accounting support to enhance regulatory oversight.
- A two-phase inspection process will be implemented, focusing on assessing money laundering risks and market functionality, followed by thorough investigations targeting non-compliant operators.
- Stricter criteria for major shareholders and disqualification of those with legal violations or poor social credit history will be enforced.
- Alignment with Financial Action Task Force (FATF) guidelines underscores the commitment to preempting suspicious transactions during investigations.
Impact on Crypto Market: South Korea’s regulatory landscape is evolving, with imminent rules targeting crypto firms for fraud and trust violations. The Virtual Asset User Protection Act, effective from July 19, introduces severe penalties for market manipulation and requires enhanced security measures for user funds.
Transparency Measures: In response to concerns over insider trading, high-ranking public officials are now mandated to disclose their cryptocurrency holdings, aiming to improve transparency and accountability within the political sphere.
Conclusion: The FIU’s proactive approach signals South Korea’s determination to crack down on illicit crypto activities, aligning with international standards and introducing stringent regulations to foster a secure and reliable digital asset ecosystem.
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