“The amendment to the Act on Reporting and Use of Specific Financial Information passed this afternoon in a full session of National Assembly. The passing of the amendment signifies the official entry of cryptocurrency trading and holding into the legal system for the South Korean government. A restructuring of the domestic blockchain industry is expected to take place as a result of this event.”
The amendment is based on full information and regular reporting from companies that want to operate crypto exchanges.
But still a signature from President Jaein Moon is needed to start the legalization process.
This process will take one year from signing, followed by a six-month grace period.
For all entities subject to the law, they have until September 2021 to time to prepare for fully comply with these rules and laws.
“Exchanges, trusts, wallet companies, and ICO are now required by law to have a real-name verification partnership with an approved Korean bank. Real-name accounts prevent money laundering by assigning a verified individual to a single bank account with which they may withdraw and deposit fiat currency from and to an exchange. Also, companies must obtain an information security management system (ISMS) certification.” said news.asia
One of the main impulses was the dizzying influx of new exchanges in 2017 where South Korea registers up to 70 new exchanges.
Many traders have been subject to fraud and manipulation by these exchanges.
What most traders worry about is that their exchanges would lose their rights and their permission to operate and they lose deposits.
Only 6 exchanges in Korea are with a banking system and fully licensed, as Upbit, Bithumb, Coinone, Korbit, GoPax and Hanbitco
It is therefore possible that 80% of the cryptocurrencies exchanges will close within next year and Korea cleans up space from untrusted companies.
“Investors have suffered greatly by the ‘wild west’ regulatory landscape of the cryptocurrency trading industry in Korea in the past few years. Numerous accusations and some guilty verdicts of fraud have been doled out. Upbit has been in the middle fraud accusations for years, as has Bithumb, BOSCoin, Komid, and Newbit, among others.” said news.asia
In response to the attempt to rectify the wrongs of the past, Hanbitco CEO Sunga Kim commented, “A foundation has been created to wash away the stigma of cryptocurrency exchanges, fraud, and debauchery and establish itself as a transparent and reliable industry. It will lead the development of the industry with the inflow of new capital.”
Regulations is increasing every day, which is a good impulse to make the world of digital assets a place where there will be minimal space for companies playing impure games.