In a bid to clamp down on illicit activities, South Korea’s financial regulators have turned their attention to over-the-counter (OTC) cryptocurrency trades. This shift in focus is due to the growing concerns over the misuse of these platforms for unlawful transactions.
Regulatory Focus on OTC Cryptocurrency Trading
The Financial Services Commission (FSC), along with other regulatory bodies in South Korea, have recently participated in a session discussing the legal issues related to virtual assets, particularly focusing on unregulated OTC cryptocurrency trading. Ki No-Seong, the FSC’s deputy chief prosecutor, emphasized the need to regulate the OTC cryptocurrency market to address money laundering concerns.
Unlike regulated cryptocurrency exchanges, OTC platforms allow users to trade in crypto assets that are not listed on traditional exchanges. These platforms are often used by high-end investors seeking anonymity. It was highlighted that while the country’s largest cryptocurrency exchange, Upbit, lists 192 cryptocurrencies, OTC platforms offer up to 700 cryptocurrencies for trading.
Concerns over Illicit Activities
Regulators have expressed concern over the fact that North Korean actors have been using OTC platforms for illegal foreign exchange transactions. Furthermore, these platforms have been linked to laundering crypto assets obtained through hacking or ransomware attacks. The Korea Customs Service has reported that the value of illicit foreign exchange transactions through cryptocurrencies reached $4 billion last year.
Measures to Combat Crypto-Related Crimes
In response to these issues, South Korean regulators have implemented several stringent measures to regulate crypto activities. In June, the National Assembly of South Korea passed the Virtual Asset User Protection Act. In addition, a law was passed in May that requires lawmakers to disclose their crypto holdings. The FSC also implemented a similar rule for companies, requiring them to disclose their crypto holdings from next year.
In an effort to further combat crypto-related crime, the country launched an interagency investigation unit in late July. Last month, South Korea passed guidelines directing crypto exchanges to allocate at least $2.3 million or an equivalent of 30% of their daily average deposits as reserves.
As we navigate the complex world of cryptocurrencies and the evolving OTC crypto-regulations, platforms like cryptoview.io can provide valuable insights and analytics to stay informed and make better decisions.
