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You are here: Home / Archives for FSC

FSC

South Korea Targets OTC Crypto Regulation Amid $4B Illicit Activity

September 19, 2023 by Mohammad Ali

In the realm of cryptocurrencies, South Korean regulators have turned their attention towards the opaque landscape of over-the-counter (OTC) crypto trading. Their objective is to thwart nefarious activities intertwined with digital assets. Recent reports illuminate that the nation’s financial overseers are ramping up their vigilance regarding OTC crypto dealings.

At a high-profile session titled “Criminal Legal Issues Related to Virtual Assets,” South Korean authorities, including Deputy Chief Prosecutor Ki No-Seong and Park Min-woo from the Financial Services Commission (FSC), convened to address the pressing concerns surrounding the unregulated OTC crypto market. During the meeting, No-Seong stressed the urgency of imposing regulations on this sector, citing the alarming potential for money laundering.

For those unfamiliar with the term, the OTC crypto market comprises exchanges operating without official government recognition. This encompasses all digital currency transactions that transpire outside the confines of regulated platforms, including peer-to-peer (P2P) exchanges. The report reveals that Upbit, South Korea’s largest regulated crypto platform, boasts a selection of 172 cryptocurrencies, while OTC platforms provide access to a staggering 700 digital currencies.

Unveiling OTC Crypto Conduits In South Korea

The investigative report exposes instances where OTC platforms were conduits for converting digital assets into Korean won. In one case, the International Crimes Investigation Department of the Incheon District Prosecutors’ Office apprehended and indicted three individuals on charges of conducting illegal foreign exchange transactions from October 2021 to October 2022.

Shockingly, these suspects were found to have procured a whopping $70.9 million (equivalent to 94 billion won) worth of digital currencies from overseas OTC platforms at the behest of Libyan clients. Subsequently, they funneled these ill-gotten assets into South Korea for conversion into cash. According to official estimates by the Korea Customs Service, the total value of unlawful foreign exchange transactions facilitated through digital currencies reached an alarming $4 billion (5.6 trillion won) last year.

South Korea has steadily built a reputation for its stringent cryptocurrency regulations, boasting an array of measures designed to combat crypto-related criminal activities. The recent focus on OTC crypto markets underscores the nation’s commitment to tackling this evolving threat, with regulators displaying heightened vigilance after Terra’s dramatic collapse.

Related Reading:| South Korea’s Crypto Crackdown: Pursuing Illicit North Korean Funds

Filed Under: News Tagged With: Crypto, Cryptocurrency, FSC, Ki No-Seong, otc, Park Min-woo, south korea

New Digital Assets Bill: South Korean Officials To Impose More Control Over Crypto Exchanges

November 24, 2022 by Mishal Ali

South Korean officials are bringing out proposed amendments to the Digital Assets Bill in an effort to impose more control over cryptocurrency exchanges. 

As reported by News1 Korea that to prevent another FTX disaster, Rep. Yoon Chang-Hyun, a People’s Power party member, drafted a proposal for an amendment that will increase the power of Financial Regulatory Agencies such as the Financial Services Commission and the Financial Supervisory Service instead of letting exchanges regulate themselves.

The report states that following the crypto market crisis, there is a demand for the Financial Services Commission to take over the regulation of “client deposits,” which had previously been left under the control of the private sector.

Additionally, to protect clients’ investments, the Financial Supervisory Service Governor will be given greater authority to keep an eye out for those who provide virtual assets, such as the authority to inspect virtual operators.

According to the National Assembly and political circles:

Rep. Yoon Chang-hyun of People’s Power plans to propose a revision to the digital asset safe transaction bill at the 1st subcommittee on legislative review of the National Assembly Political Affairs Committee held on the same day. 

The Newly Proposed Digital Assets Act

Customers’ deposits will now be managed separately, and financial regulators will now have the power to stop unfair business practices, according to the amended Digital Assets Act. In addition, “trust and management methods were entrusted to the Presidential Decree.”

The newly proposed bill also stipulates that a digital assets operator cannot unilaterally confiscate a user’s deposit if the user has given their deposit to a management institution.

Financial authorities also took control of self-regulation on unfair trade practices, which had been left in the hands of existing virtual asset operators. Moreover, company owners cannot self-regulate; instead, they must adhere to the procedures decided upon and announced by the FSC.

Furthermore, the report also highlighted the FSC and FSS both share the duty of overseeing businesses engaged in digital assets. The FSC has the power to supervise whether they comply with orders or dispositions under the law. If necessary, it can also entrust some authority to the Governor of the FSS.

An official from the National Assembly said:

The bill was submitted to reflect on the FTX incident and prevent a recurrence, and the financial authorities’ influence was strong.

Related Reading | Cryptocurrency Market Stays Strong Despite Greater Turmoils Than FTX Collapse: Chainalysis

Filed Under: News Tagged With: FSC, FSS, ftx

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