South Korea is one of the world’s largest bitcoin and blockchain hubs. Accounting for roughly one-quarter of global crypto transactions, it is now being subjected to stricter cryptocurrency regulations from the country’s Financial Services Commission (FSC).
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The country’s top financial regulator is following through on an order placed by the Financial Supervisory Service (FSS) to consider tougher policies toward cryptocurrency trading. Per an FSC official on Sunday:
“Following a request by the Financial Supervisory Service (FSS) and the prosecution to address growing anti-money laundering compliance concerns and possible abuse of cryptocurrencies in money laundering and fraud, the FSC is examining exchanges’ corporate accounts opened in local banks.”
The news comes after authorities raided popular South Korean cryptocurrency exchange Upbit late last week. The company’s executives are being accused of illicitly moving customers’ funds into their own accounts and falsely reporting the number of coins being held on the exchange. Trading remained virtually uninterrupted, and executives later released the following statement:
“Upbit is currently under investigation by the prosecution, and we are working diligently. Upbit services, such as all transactions and withdrawals, are operating normally. Your assets are kept securely in your account, so you can rest assured that you can use Upbit services.”
It’s the FSC’s job to regulate financial policies, while the FSS “examines and supervises” the operations of financial institutions. Both organizations are working together to find common ground, as inspections of financial issues have “different scopes.”
Officials of the FSC also claim they are collaborating with monetary authorities from other countries, and that evidence suggests Upbit may have faked its balance sheets and deceived investors.
“The FSC is checking Upbit’s computer system with prosecutors, and the FSS will audit the exchange’s virtual currency holdings,” exclaimed another representative.
This news comes only weeks after current FSS governor Yoon Suk-heun stated that the body was seeking to “ease regulations” on domestic cryptocurrency trading, and that there were “some positive aspects to cryptocurrencies.” Per Yoon on May 8th:
“There are a lot of issues that need to be addressed and reviewed. We can figure them out gradually.”
Meanwhile, an Upbit official has commented that executives don’t necessarily oppose regulations, but that Yoon should “think about how the regulators should provide remedies to help crypto-trading and blockchain technology get better.”
Is the FSC making the right decision by playing hardball in South Korea? Post your comments below.
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