South Korea continues to enforce stricter rules on the cryptocurrency space with the latest legislation to classify exchanges as high-risk entities. The move comes as the Asian country aims to enhance the monitoring of financial transactions and user ID verifications.
- The Korea Times reported that the Financial Services Commission (FSC), South Korea’s financial watchdog, has implemented a new classification on cryptocurrency exchanges.
- According to the new legislation, trading venues will be placed in the same category as other high-risk organizations.
- This is the FSC’s latest attempt to strengthen financial transaction monitoring and user ID verification.
- Those who refuse to comply with such verification procedures will be denied services. Furthermore, the lenders will have to file suspicious transaction reports to the Korea Financial Intelligence Unit (KoFIU).
- The agency has outlined a growing number of exchange clients who have expressed concerns about the lack of protection for their funds on smaller trading platforms. Only four local exchanges have used real-name accounts cleared by banks out of 60.
- Another recent measure aiming to enhance the customers’ protection came in early May. South Korea’s bank associated advised its members to investigate the rapidly growing number of alternative coins available for trading on exchanges due to increasing losses for investors.
- At the same time, the country also plans to introduce a 20% capital gains tax on profits from cryptocurrency trading, which should become official in 2022.