South Korea has taken significant steps to tighten control over cryptocurrency exchanges with the rollout of new regulatory measures. The Financial Intelligence Unit (FIU) has launched a strategic plan for 2024 that targets enhanced surveillance to curb illicit transactions. The country’s proactive regulatory efforts come on the heels of announcing more stringent rules for the broader crypto sector.
Strengthening Surveillance and Compliance
The FIU’s framework involves setting up a system to halt dubious transactions rapidly, aiming to obstruct efforts to launder money. Moreover, the plan calls for restrictions on access to disreputable crypto exchanges and the strengthening of screening and anti-money laundering protocols to block access to the South Korean won. A detailed inspection of renewal reports for crypto exchanges is slated, with a focus on risk assessment, operational standards, and consumer protection.
The FIU also plans to augment reporting requirements by broadening the Special Financial Information Act. This will introduce considerations like social credit aspects, including debt default, and will scrutinize major stakeholders and individuals previously penalized for regulatory infringements. Additionally, the FIU is setting the stage to align with the Financial Action Task Force’s guidelines, endorsing a preventive suspension system for suspect transactions to mirror international norms.
Consequences for Crypto Exchanges Under New Regulations
Following the announcement of firm cryptocurrency regulation, including the Virtual Asset User Protection Act, the new measures aim to thwart market manipulation, illegal trade practices, and the exploitation of non-public information. The government’s message is unequivocal, with penalties for breaches stretching from monetary fines to potential life sentences.
The government’s assertive approach to cryptocurrency oversight reflects the sector’s increasing need for stringent governance. With the tightening of regulations and the introduction of hefty penalties for non-adherence, industry players are being pushed to prioritize compliance to maintain the market’s integrity and security.