South Korea Strengthens Crypto Oversight

Financial regulators in South Korea have issued an update on 4 December, calling on users to report any unlicensed cryptocurrency exchanges providing services within the region.

The Digital Asset Exchange Association (DAXA) and the Financial Intelligence Unit (FIU) of South Korea collaborated on this initiative.

DAXA comprises major digital asset exchanges such as Upbit, Bithumb, Coinone, Korbit, and Gopax.

Reporting Procedures

The regulators aim to identify both domestic and foreign virtual asset business operators targeting Korean citizens, not adhering to Article 7 of the Specific Financial Information Act.

The approach includes a two-tier review process.

Reports will be initially reviewed by DAXA before being forwarded to the FIU for further assessment, determining the operator's status and the need for notification.

An official from DAXA emphasised that if operators persist in "undeclared business activities," the FIU plans to take necessary measures, potentially involving investigative agencies.

Reports can be submitted through DAXA's tip email address, requiring comprehensive information about the business, reasons for suspicion, and evidence of undeclared activities.

South Korea's Growing Crypto Landscape

This development aligns with South Korea's increasing involvement in the crypto industry.

On 14 November, the Democratic Party mandated its parliamentary candidates to disclose personal crypto holdings for transparency.

In October, the Financial Supervisory Service announced preparations for regulations to supplement the Virtual Asset Users Protection Act, expected by January 2024.

Additionally, South Korea's central bank plans to invite 100,000 citizens to test its central bank digital currency in 2024.

This step represents a strategic move in exploring and understanding the implications of digital currencies on a broader scale.