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South Korea to Copy Global Models in Fintech Adoption

South Korea to Copy Global Models in Fintech Adoption

The government of South Korea has committed to revising current laws that would allow for more flexibility in fintech startups in the country to create new business models. This was a statement made by the Financial Services Commission (FSC), as reported by local English daily Korea Times.

Should this change come into effect, local firms will be able to use global models as templates and quickly adopt business practices and financial services, especially those developed by so called tech unicorns across the world.

The FSC used the example of fintech startup Kabbage that offered loans to SMEs as well as retail users on its platform, to show how useful that could be in the Far East country:

“We will consider whether to allow the adoption of overseas models by local startups beginning in July.”

As of now, the only entities allowed to offer such loans to clients are banks or financial units of non-banks such as credit card suppliers and mutual savings.

Prime Minister Lee Nak-yon said that the consideration of such sweeping changes represented the state’s desire to give a boost to its fintech sector, hoping to spur innovation and and the creation of new industries through deregulation. Lee announced at a recent policy meeting in the administrative city of Sejong:

“I urge all government agencies to move forward in relaxing rules after reflecting on the needs of the market so that new industries such as fintech, drones and hydrogen vehicles can be developed.”

A taskforce set up by FSC has reviewed 188 cases of potential financial services using new tech, for a possible revision, with a proposal to amend laws at the National Assembly in the second half of 2019. One such law will allow financial firms to fully acquire fintech startups — now they are only allowed a maximum of 15%. is committed to unbiased news and upholding journalistic codes of ethics. For more information please read our Editorial Policy here.

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South Korea on Edge Thanks to Crypto Bulls

South Korea on Edge Thanks to Crypto Bulls

South Korea state authorities are on high alert following the incredible run for Bitcoin price and the rest of the crypto market since April. Despite a general positivism throughout the industry during the rally, the government there has called a meeting to discuss the possible outcomes for current market conditions.

First reported by local broadcaster KBS World Radio, the meeting was held yesterday, chaired by Minister of the Office for Government Policy Coordination Noh Hyeong-ouk. Officials from the Ministry of Economy and Finance, the Justice Ministry and the Financial Services Commission (FSC, the national market regulator) were reportedly present.

A decision was then taken to closely monitor the market for volatility and prepare actions to mitigate possible ramifications to investors.

Noh reminded the meeting attendants that cryptocurrencies had not yet found a firm legal status in the country. He also urged to pre-empt special conditions that were developing, especially in the face of rising speculation and investor interest, asking to deliberate on the next steps:

“Since virtual currencies are not legal currencies and nobody guarantees their value, the price fluctuates drastically due to illegal acts, speculative demand, and changes in the domestic and foreign regulatory environment. It is necessary to make a careful decision on a series of actions.”

The last two months have seen a rally that has yet to abate, with much of the demand happening in East Asia, with buyers in South Korea willing to pay above KRW 10 million (USD 8,400) today. Earlier in May, South Korean authorities chose to repeal existing draft legislations for anti money laundering in cryptocurrency, choosing instead for a path that would allow for more direct regulations for cryptocurrency exchanges.


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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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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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