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- South Korea reports on strained cryptocurrency activities and regulations in the country
- Platforms will be asked to register with a back up bank that issues accounts
- Failing to do so will lead to winding up of the crypto exchange
Cryptocurrency is very volatile in nature. It is a decentralized mechanism that can only be controlled with a loose Government framework regarding its operations natively in countries. Countries that are passively adopting the use of cryptocurrency are either looking at a booming economy or a huge devaluation of the sovereign currency. A straight example is South Korean. The South Korean cryptocurrency exchanges have been highly swift about the acceptance of crypto exchanges and trading in the country. They’ve realized that the only way to accept crypto is to regulate it in a manner that does not pose authority.
South Korea imposes stricter guidelines to regulate decent crypto exchanges
Transactions and cryptocurrency exchanges that have ‘too many’ coins involved on their platforms will be denied access to personal bank accounts, a report suggested on 28th June. Lenders have been issued a risk assessment guideline that classifies exchanges with high numbers and frequency of crypto transactions as too risky for commercial lenders’ involvement. The Korea Federation of Banks drew the guideline in the month of April. The federation consisted of 22 members representing commercial banks, state-run lenders, and 36 associate members.
Since the commercial banks resist issuing real-name accounts for local cryptocurrency exchanges’ virtual asset customers, the document emerges as a recourse. An amendment to the Act on Reporting and Using Specified Financial Transaction Information allows the cryptocurrency platforms to find a bank that backs their issue of accounts. This will make those banks responsible for filtering the exchanges to assess risks and transparency. Shutting down will be the only option left for exchanges that fail to provide a bank that issues accounts for them.
Higher frequency and coin count will be leading to higher risk
Other than the fundamental criteria, exchanges that are deemed as high risk will be listed as a low credible platform with differently listed coins. This will also be determined to what extent the platform provides other financial services besides regular transactions. The nationalities of their virtual asset customers, their occupations and the respective proportions of customers in each group will be used to assess the risks of the exchanges as well, the report showed.
The guideline also called for the banks to look into any fraud or records of crimes by the exchanges’ operators and leadership to assess their soundness.More than half of the certified exchanges here, meanwhile, have been removing some altcoins from their platforms or placing them on a warning list, wary of the stricter digital currency transaction rules set to take effect in September.
Recent reports said that banks here have asked the financial authorities not to hold them responsible for money laundering or other fraud involving digital coins.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
