Category Archives: Financial Services Commission

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South Korean Crypto Exchanges Combine to Tighten AML Security

South Korean Crypto Exchanges Combine to Tighten AML Security

South Korean exchanges Coinone, Corbit, Upbit, and Bithumb have joined in implementing heightened levels of anti-money laundering (AML) security in view of high-level hacks over time.

Despite the country’s high level of regulation, requiring companies offering cryptocurrency products to implement AML security, hackers have proven to find ways of infiltrating some exchanges’ safeguards.

The four exchanges will focus on activities such as voice phishing, pyramid schemes, and other illegal trading activities. A new system will ensure a register of suspicious wallets which may be used for illegal activity.

South Korea’s Yonhap News Agency reported that these four exchanges “…are now able to instantly check any wrongful transactions made at other exchanges and take necessary measures, such as blocking their own related accounts. The cooperative step against money laundering via cryptocurrencies is expected to boost the soundness of the industry and to better protect consumers.”

South Korea enjoys a cryptocurrency system similar to Japan where exchanges cooperate for the betterment of the industry. This was illustrated at the end of 2018 where seven exchanges combined to sign an accord for the “Agreement for the creation of a sound cryptocurrency ecosystem”.

The exchanges, Upbit, Bithumb, Korbit, Coinone, Gopax, Coinplug (Cpdax), and Hanbitco, stated the accord’s aim was to not only to create a healthy ecosystem but also to prevent crime and protect investors by creating a sound ecosystem and preventing money laundering.

Financial Services Commission (FSC) head of financial innovation, Kwon Dae-Young, has declared that the aims of the government are always the same regarding cryptocurrency, maintaining that the integrity of the space is vital:

“We are trying to institutionalize [cryptocurrency exchanges] but before we do, we have to answer the question of how to deal with the damage and tears of many virtual currency investors. We must see if any of the projects that can help the people in their daily lives have been presented. Trust and authenticity are important.”

 

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7 Major South Korean Exchanges to Create “Healthy Crypto Ecosystem”

7 Major South Korean Exchanges to Create

As the South Korean government continues to work on institutionalizing cryptocurrency exchanges, seven major players have signed an ‘Agreement for the creation of a sound cryptocurrency ecosystem’.

Local media reports that the exchanges, Upbit, Bithumb, Korbit, Coinone, Gopax, Coinplug (Cpdax), and Hanbitco, have stated the accord’s aim is to not only to create a healthy ecosystem but also to prevent crime and protect investors by creating a sound ecosystem and preventing money laundering.

Information sharing and real-time monitoring of unusual transactions will become a major focus of the group’s activities along with more check and balance measures such as restrictions on unverified customers. Financial Services Commission (FSC) head of financial innovation, Kwon Dae-young, declared that the government’s position had not changed much since it was revealed last December:

“We are trying to institutionalize [cryptocurrency exchanges] but before we do, we have to answer the question of how to deal with the damage and tears of many virtual currency investors. We must see if any of the projects that can help the people in their daily lives have been presented. Trust and authenticity are important.”

The new agreement signed by the seven exchanges demonstrates that industry aims appear to be very much in line with the government’s own. Ubit’s de facto voice, Dunamu Inc’s Lee Seok-woo, proposed his own protectionist measures to bring South Korea’s exchanges into line. Lee suggested minimum qualifications and standards for the industry should be bought into play, AML/KYC guidelines should be observed and a new exchange registration system could be introduced: “If you [crypto exchange] cannot meet the standard after a six-month or one-year grace period, you should close it.”

Last month, 40 international and South Korean experts formed another group, the Blockchain Special Committee, which plans to establish a blockchain hub in South Korea’s North Gyeongsang Province, also known as Gyeongbuk. Members of the association will be tasked with deliberating and consulting on the creation of “mid-to-long-term strategies” that will foster the blockchain industry.

 

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South Korea’s Biggest Exchange Cleared of Insolvency Charges

Following the raid of South Korea’s largest cryptocurrency exchange UPbit on insolvency charges, an audit has confirmed that all of its digital currency balance sheets have not been subject to manipulation and the platform has the total funds it claims.

Officials took action in May after concerns were raised that UPbit was inflating its trading volumes while manipulating the balance sheets to match. South Korea’s Financial Services Commission and Korea Financial Intelligence Unit took documents and hardware from the exchange’s headquarters to appraise the details in line with the anonymous tip-offs claiming its insolvency.

A recent evaluation by one of the country’s largest accounting firms, Yoojin, declared that UPbit was operating with all of the declared assets, with the results of the audit published by Korean internet provider Kakao’s subsidiary company Dunamoo. While this has reassured many local investors using the platform, the lack of a response from the local government has led critics to query the legitimacy of the audit.

Details of the audit claim that the cryptographic screening shows UPbit has around 103% of the money based on the total needed to be paid to customers, with the aggregate funds of the exchange reaching 127% of the total that it holds for customers.

The president of Dunamoo Lee Seok-woo attested the authority of the results, saying UPbit has enough money to compensate all customers whenever they wish to withdraw their funds. He also noted that the exchange would comply with regular audits in the future to prove its financial conditions are fully legally compliant.

The recent hack of South Korean exchange Bithumb ignited mistrust with the platform, pushing UPbit to the country’s number one cryptocurrency exchange spot. Shinhan Bank-backed platform Gopax is expected to overtake the trading volume of both exchanges in the near future.

 

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South Korea Set To Adopt G20 Recommendations and Ease Crypto Regulations

The Korea Times has reported that South Korean regulators are about to ease cryptocurrency regulations in line with G20 recommendations.

Back in May, government regulators made an initial agreement to apply the G20’s “unified regulations” and classify digital currencies as assets, having agreed that the situation regarding the trading of cryptocurrencies needed improving.

It appears according to the Korea Times report that the Financial Services Commission (FSC) has now revised its guidelines for cryptocurrency exchange operators. A government official commented about the latest developments:

“The FSC made revisions to its rules to apply strengthened policies in order to prevent or detect money laundering and illegal activities because the regulator isn’t opposed to cryptocurrencies.”

Another official commented that adopting the recommendations are in the “early stages of fine tuning” but that the establishment of unified rules has its complications.

The loosening of South Korea’s current cryptocurrency regulations illustrates the degree to which the government sees the value of blockchain and acknowledges the growth of cryptocurrency in the country’s financial sector. However, security issues still remain a concern to the government. A Trade ministry official commented on this aspect of the current changes to legislation suggesting that changes would be made, “but not at the expense of safety and security.”

The government’s gradual shift towards cryptocurrency adoption will certainly give a lift to the industry in South Korea. Mainstream adoption, if it comes, will have a massive impact providing it moves beyond speculative trading, says Seoul-based technology journalist National Tax Agency:

“Global banks predict that interest in cryptocurrencies will double. We believe an increase in adoption will come when crypto-assets can be used as actual currencies rather than just speculative investments.”

Hong Eu-rak of the ruling Democratic Party has suggested that there are current discussions in the progress to lift the country’s ban on ICOs, and it has also been reported that further discussions with the National Tax Agency to develop a taxation framework for cryptocurrencies is underway.

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Gibraltar Stock Exchange Subsidiary Seeks Regulated Blockchain Exchange

A subsidiary of the Gibraltar Stock Exchange (GSX) is aiming to become one of the first licensed and regulated crypto exchanges operated by an EU stock exchange.

The company, the Gibraltar Blockchain Exchange (GBX), has reportedly introduced 300 retail account holders to its platform as part of its launch. The company has suggested that in order to monitor and develop how to present the best user experience for its future customers, the invited retailers will be asked to offer feedback after the launch.

It plans to serve institutional cryptocurrency investors at start up, with CEO Nick Cowan suggesting that the platform will be “fair, transparent, efficient, and safe”.

Gibraltar aims to lure new and existing fintech companies to its shores, following in the footsteps of other European countries such as Malta and Switzerland, both of which have seen the arrival of major cryptocurrency players like Binance and Bitmain in recent months.

The 2nd Gibraltar International FinTech Forum held earlier this year, with another ‘Gibfin’ forum to follow in September 2018, demonstrates the country’s serious intent when it comes to