South Korea urges crypto platforms to 'strengthen compliance capacity'

Quick Take

  • The Korea Financial Intelligence Unit met with five domestic virtual asset services providers — including Upbit and Bithumb — to help them “bolster response to illegal activities.”
  • The country launched an interagency investigation unit to fight against crypto-related crime.

South Korean authorities will work to support virtual asset service providers' compliance efforts and combat relevant crime as the country awaits proper legislation amid surging illegal activities in the market, the government said today.

The Korea Financial Intelligence Unit — an agency dedicated to tackling money laundering and terrorist financing — held a consultative body meeting to “strengthen the compliance capacity of virtual asset service providers,” according to a statement published today by the Financial Services Commission.

The meeting occurred just a day after the country launched an interagency investigation unit to fight against crypto-related crime. The interagency unit comprises at least 30 investigators from the prosecution, the Financial Supervisory Service, the National Tax Service and the Korea Customs Service, Yonhap news agency reported.

“Although the KoFIU has been carrying out its oversight functions mainly within the framework of anti-money laundering efforts, we will operate a strategic analysis team on virtual assets to more systematically analyze criminal activities involving virtual assets so that we can provide more meaningful and valuable data to the investigative authorities,” KoFIU Commissioner Rhee Yunsu said at the meeting.

Five domestic crypto services providers attended the meeting and reported their measures for dealing with potential crime. 

Upbit, a South Korean exchange, said it had used artificial intelligence to help with fault transaction detection, according to the statement. Another exchange, Bithumb, said it has developed its exchange app to detect illegally matched orders and automatically shut down related features when it catches a remote control app being deployed.

New crypto legislation in South Korea

In June, South Korean lawmakers passed legislation to better protect crypto investors. The new legislation, comprised of 19 crypto-related bills, gives the FSC and the Bank of Korea the authority to oversee crypto operators and asset custodians. The new bill also allows authorities to enforce penalties in cases of unfair trading of virtual assets.

Earlier this month, the FSC said it would require domestic companies to disclose cryptocurrency holdings from next year as part of new accounting rules. The new rules will also require crypto issuers to disclose information including token details, business models and internal accounting policies.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.