Officials from South Korea’s Financial Services Commission (FSC) have detailed measures it will take to control the growing cryptocurrency sector in the country.
Local media sources reported that Korea is one of several Asian nations, including China and Japan, which is aiming to regulate these decentralized digital currencies. At this present time, South Korea does not recognize any cryptocurrency as a true financial product and it has expressed concerns that trading platforms (crypto exchanges) are virtually unregulated.
The FSC has promised to “step up monitoring and look into money laudering, unauthorized financing and digital currencies illicit transactions,” according to Yonhap news agency.
Among the measures talked about is to improve the procedure of identity verification for those people working at cryptocurrency exchanges. Yonhap further reported the FSC as stating, “If bank accounts is flagged for suspicious transactions, lenders are required to inform the authorities about the transactions.”
A spokesperson for the Financial Services Commission also revealed that they are looking to “punish Initial Coin Offerings (ICO) raising funds in the form of stock issuance using digital currencies allowed only in some countries, including Switzerland, for violating the capital market act,” according to Business Korea.
Additionally, banks which have dealings with crypto currency exchanges must act with due diligence and conduct proper checks regarding the effectiveness of the exchanges’ internal protocol procedures, as in its ‘Know Your Customer’ identification methods. Banks will also be able to suspend any accounts which it deems did not provide sufficient information.
The tightening of regulations will also impact remittance businesses which use digital currencies. These operators are to report daily records of all cryptocurrency transfers to the Bank of Korea.
This recent announcement comes fresh off the news that Bithumb, the largest Bitcoin exchange in Korea, exceeded 2.6 trillion won in daily trading volume (on August the 18th) and this was higher than the country’s Kosdaq market which did 2.43 trillion the previous day.