South Korean Financial Intelligence Unit (FIU), an agency that operates under the jurisdiction of the Country’s Financial Services Commission (FSC), has announced plans to directly involve in the supervision of crypto exchanges in the country.
According to a report in Business Korea today, cryptocurrency exchanges in South Korea before now were controlled indirectly through laws governing financial institutions as administered by the FIU.
The agency has stated that it plans to use a tool dubbed the “cryptocurrency exchange licensing system” to directly involve in the regulation of crypto exchanges in the country.
Lee Tae-hoon, director of administration and planning at the FIU, spoke at a public hearing on the enactment of laws to improve transparency in virtual asset trading, held at the National Assembly Member’s Office building yesterday.
“If an amendment to the Act on Reporting and Use of Certain Financial Transaction Information, which reflects the FATF’s international standards for cryptocurrencies, passes the National Assembly, it will be possible to prevent money laundering through cryptocurrencies.”
He stated that when the legislators approve it, crypto exchanges will stop being regulated through laws that govern financial institutions, but rather have their separate rules.
“If lawmakers approve the amendment, we can raise the effectiveness of regulations by shifting from the current indirect regulation through commercial banks to direct regulation,” Lee said.
Additionally, if approved, the system would help improve the transparency of crypto transactions and curb the issue of using digital currencies for fraudulent activities, especially money laundering in the country.
In response to this development, some crypto trading platforms have hinted that before the regulations become binding, the FIU needs to address the rules governing banks’ issuance of real-identity accounts to exchanges before implementing same on cryptocurrency trading platforms. It would also help maintain equality and fairness in how crypto exchanges and traditional financial institutions are regulated.