Category Archives: FSC

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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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Crypto Exchange Execs Arrested In South Korean Raids

It was revealed on Thursday that four executives from two cryptocurrency exchanges are being questioned by South Korean police over alleged embezzlement.

The detentions of Kim Ik-hwan, CEO of Coinnest, and the other executives, whose names have not been published, is part of a crackdown on cryptocurrency fraud over the past few months. This arrest of Kim follows another raid last month of exchanges in Yeouido, South Korea’s own Wall Street equivalent.

The prosecutor’s office claim that billions of Korean Won (KRW) had been transferred from clients accounts. Coinnest, whose executives have now been replaced, is the fifth-largest exchange based on trading volume in South Korea. A “specialized management system” has been introduced at Coinnest in order to “resolve customer anxiety” since the arrest of the company’s CEO, according to a statement released this week.

The arrests demonstrate the South Korea government’s intent to clean up the industry following its adoption of further regulatory measures earlier this year. Although the government stopped short of banning trading, it has stated it needs to prioritize more transparency in dealings. Last year, the Financial Services Commission (FSC) prohibited domestic companies from participating in ICO activities. The FSC warned then that further measures would be introduced as part of an “intensive crackdown” including on-site inspections and analysis of user cryptocurrency accounts.

The new measures introduced at the end of last year saw a wave of arrests and closures of fraudulent companies marketing fake cryptocurrencies, which, according to FSC amounted to illegal profits of USD 22 million from around 1,000 investors. The measures were seen by many in the industry as the government’s answer to legislators in South Korea who wanted a complete ban on cryptocurrency trading.

Other measures to combat embezzlement include the requirement that cryptocurrency traders associate their real names to accounts, the prohibition of mining, and the ban on overseas institutions and individuals in domestic crypto trading.

 

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