The South Korean government has declared cryptocurrency exchanges as legitimate financial institutions. This development may lead to plans to further regulate such exchanges with the intention of protecting investors.
The development occurs as South Korea continues to be one of the world’s top countries regarding cryptocurrency trading. However, there have been concerns over the safety of such exchanges in the country. The recent hack of the Coinrail exchange is the latest development in a long line of issues within South Korea. The hacks around many exchanges have caused the currency market in the country to become wary of online risks and the potential for losses that could hurt the market as a whole.
As the currency industry grows in South Korea, the number of exchanges has gone up, especially as it becomes easy for such groups to be set up. But with the market becoming overly complicated, more groups are aiming to work towards handling the market and making it regulated. The government is aiming to review more functions within exchanges and provide them with the same standards for operation as many other banks in the country.
The Korean Financial Intelligence Unit announced that cryptocurrency exchanges might qualify as traditional financial institutions in South Korea. The development ensures that KYC and AML policies may be incorporated in these exchanges. The Know Your Customer and Anti-Money Laundering policy standards used by many other banks around the country could be implemented upon exchanges to ensure that customers at these exchanges are kept safe.
The development comes as currency exchanges in South Korea continue to operate for cheap. An exchange can legally run in the country so long as it provides a $40 vendor license. The Korean Free Trade Commission currently does not have any authority to access cryptocurrency exchanges nor can it monitor customers on those exchanges, although there is a potential that this regulation may change.
Authorities will be capable of handling regulations on exchanges similar to what people might find in more traditional banks around the country. This would give the KFIU extra control over how finances run around the country. Part of this includes identifying what exchanges do when confirming the identities of people and recognizing what they would do with their currencies. The overall goal is to prevent money laundering, fraud, and other illegal activities from spreading around the currency field.
The development in South Korea is the latest consideration that has come about within the country surrounding the potential for cryptocurrencies to be accepted in a larger capacity. Many investment firms, including ones that do business in South Korea, have been working with cryptocurrencies as new assets that they can utilize when supporting investments in many forms.
However, the new regulations being supported in South Korea may be vital to helping to get the cryptocurrency market to be more visible and assisted in many forms. This includes working to ensure that more people can handle such currencies without being at risk of having their data being harmed in any form.