South Korea plans to treat cryptocurrency exchange similarly to banks

14 Jun, 2018
by Matthew Kim
News
South Korea plans to treat cryptocurrency exchange similarly to banks

Last week, the Korean Financial Intelligence Unit (KFIU) announced that it will enforce strict Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations, akin to those on traditional banks, on cryptocurrency exchanges. The move would essentially categorize cryptocurrency exchanges as banks.

According to 8btc, a KFIU representative said the following in a statement:

“Under current regulations, there are clear limitations in preventing money laundering on cryptocurrency exchanges because the only way authorities can spot suspicious transactions is through banks. If the bill of lawmaker Jae Yoon-kyung from the Democratic Party of Korea passes, local authorities will be able to impose identical regulations on cryptocurrency exchanges that are implemented on commercial banks.”

The reasons for the shift in the government’s attitude towards cryptocurrency exchanges are twofold: money laundering problems and hacking attacks. As the 2017 bull run brought cryptocurrency into the limelight, the industry has become a stomping ground for criminals, and the government is hoping that new regulations can help resolve some of its growing problems.

A source within the cryptocurrency market stated this:

“The government likely is imposing the new regulation to prevent the Free Trade Commission from being responsible for potential hacking attacks and thefts in the future. Currently, the government is working to allow the Free Trade Commission, Financial Service Commission, and the Congress to have complete authority over the cryptocurrency sector to regulate the market more strictly, with a primary focus on investor protection,” the source said.

While some cryptocurrency enthusiasts are fearful of regulations, constructive regulations could be necessary, and even bring good, to the explosively growing industry. With this announcement, the South Korean government intends to foster the right environment for cryptocurrency rather than destroy it.

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