The South Korean national assembly is lining up a bill that will provide a legal basis for crypto-currencies in the country. The bill, which has already passed the national assembly’s national policy committee, is only awaiting ratification from the judiciary committee.
The bill which would come into force in 2020 if approved categorizes virtual currencies as digital assets, and intends to bring clarity and transparency to crypto markets in South Korea. The bill also requires all crypto-related businesses in the country to register with the financial services commission (FSC) and the financial intelligence Unit (FIU). Korean crypto businesses will not only need to register with these two bodies, but also report to them. It doesn’t end there as far as compliance for crypto related businesses. The said businesses will also need to obtain an information security management system certificate from the state-run Korea internet and security agency according to the report.
One of the bodies that the bill places as an authority, the FSC had their say about the proposed bill. The FSC stated that the legislation will make crypto markets more transparent and legitimize investments in digital assets. The authority stressed that the bill will also require crypto related businesses to prevent illicit practices such as money laundering. The businesses will also have to adhere to stipulations set up by the Financial Action Task Force. They will do this by adopting their own monitoring systems for financial transactions that adhere with the standards of the taskforce. Crypto-related businesses that do not establish their own oversight systems will be penalized.
The proposed bill is South Korea’s second attempt to introduce an anti-money laundering (AML) framework. Early last year, the country’s regulators banned anonymous trading on crypto exchanges in line with AML and identification efforts in the country. After that, the FSC released a set of revised AML guidelines for virtual currencies in June 2018.
Being that a lot of concerns had previously been raised globally about the possible enabling of money laundering activities by crypto, the bill looks like a positive step. We are yet to see how crypto businesses in Korea will react to the proposed law. Some businesses may welcome it as a step towards legal clarity, while others may find these rules too stringent for a vibrant business.
