Korea’s KFIU Will Regulate Crypto Exchanges Like Banks
Bitcoin tumbled more than 10 percent over the weekend to its lowest in two months after South Korean cryptocurrency exchange Coinrail was hacked. In the meantime, the Korea Financial Intelligence Unit (KFIU) and other financial sectors announced that they will regulate crypto exchanges like banks.
KFIU is going to impose strict anti-money laundering (AML) policies on cryptocurrency trading to prevent cryptocurrencies from participating in finance illicit operations such as money laundering and terrorism financing, according to CCN.
Kim Geun-ik, director of KFIU attended the Policy Advisory Council meeting on June 8. He emphasized financial authorities should propose stricter regulatory policies to for both commercial banks and independent financial service providers.
Initially, the KFIU planned to only impose new policies on sectors that currently have AML and Know Your Customer (KYC) such as large-scales financial institutions, retail investors and traders in the public stock market.
However, later on, the KFIU decided to include crypto sectors in its AML and KNY initiative. According to the KFIU, the agency and the Congress will jointly pass a bill to enable local financial authorities to monitor traditional bank account and cryptocurrency related financial activities.
“If the bill of lawmaker Jae Yoon-kyung from the Democratic Party of Korea passes, local authorities will be able to impose identical regulations on crypto exchanges that are implemented on commercial banks,”said by a spokesman of KFIU.
It seems like South Korea is following Japan’s initiatives to regulate cryptocurrency market. In early May, Japan’s Financial Service Agency (FAC) also launched new criteria for crypto exchange regulations after Japanese crypto exchange Coincheck was hacked and lost $523 million USD in NEM tokens. The FAC also underlines KYC and AML processes in its new regulatory framework.
Essentially, if the bill passes, crypto exchanges will be regulated as a proper financial institution. Initially, users may feel complex with a senseloss of freedom under the KYC and AML policies, but in the long run, it will add legitimacy to the crypto market which provides a better developing environment for this emerging financial product.