October 03, 2023

Overseas cryptocurrency exchanges using Korean currency must register with anti-money laundering body: regulator

PUBLISHED : July 13, 2021 - 15:37

UPDATED : July 13, 2021 - 15:37

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A representation of the virtual cryptocurrency Bitcoin is seen in this picture illustration taken June 14. (Reuters-Yonhap)

Cryptocurrency exchanges that are based outside South Korea must register with the nation's anti-money laundering body if they use the Korean currency, a top financial regulator said Tuesday.

Financial Services Commission Chairman Eun Sung-soo made the remarks when asked by a lawmaker whether Binance, the world's largest cryptocurrency exchange, should comply with a revised law from September.

If a cryptocurrency exchange serves local customers with the won-currency settlement, it must register with the (Korea) Financial Intelligence Unit," Eun told lawmakers.

The revised law, which went into effect in March with a six-month grace period, requires banks to issue real-name accounts under stricter guidelines to prevent money laundering.

Under the rule, banks will assess a cryptocurrency exchange's transparency, business risks and the possibility of criminal activity.

Minor cryptocurrency exchanges, which are estimated to number around 100, have been using opaque accounts to lure investors. Such accounts enable cryptocurrency exchanges to manage investors' money with their own bank accounts.

From Sept. 25, minor cryptocurrency exchanges will be banned from withdrawing money for cryptocurrency trading if they have no real-name bank accounts.

Despite repeated warning from policymakers, Korean investors have been heavily buying virtual currency as they see it as a lucrative asset amid the pandemic.

More young people have been investing in cryptocurrencies, anticipating higher returns, with some saying they cannot buy houses solely with their income amid skyrocketing home prices.

Separately, South Korea plans to impose a 20 percent tax on capital gains from cryptocurrency transactions next year as scheduled, despite investors' calls for delaying the taxation plan. (Yonhap)

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