South Korean authorities have been making headlines lately, following a decision from both Korean agencies to regulate cryptocurrency exchanges in a similar vein to that of commercial bank regulation. This is mainly intended to bring cryptocurrency exchanges to parity with banks in regard to what anti-money laundering regulations affect them. However, putting them on equal footing to commercial banks is also a significant milestone for the South Korean legitimization of cryptocurrency exchanges.
This news stems from a meeting of the Korean Policy Advisory Council held a few days back, in which the head of the Korean Financial Intelligence Unit (KFIU), Kim Geun-ik, argued how the nation’s terrorist financing prevention and anti-money laundering regulations should be toughened for both individual financial service providers and commercial banks.
Although the discussions did not initially touch on cryptocurrencies, the virtual currencies were later included in the KFIU’s plans to implement new, tougher anti-money laundering (AML) and ”Know Your Customer” (KYC) policies. The decision to regulate cryptocurrency finances was reportedly taken in order to prevent cryptocurrencies from being used in ”suspicious activities” or on the black market.
The Korean Financial Intelligence Unit also noted that it would coordinate with the Korean Congress in order to implement a bill which would permit financial authorities in the country to examine and monitor both traditional bank accounts, as well as cryptocurrency users.
This will reportedly be done with the use of ”transparency”, presumably as not to be exploited, or used to compromise the anonymous nature of cryptocurrency. It should be noted that no authorities in South Korea presently have the right to monitor cryptocurrency exchanges, which is probably part of the reasoning behind this recent regulation.
With cryptocurrency exchanges now recognized as ”proper financial institutions”, and regulated according to this, the South Korean government has arguably recognized the legitimacy of the currencies. Whilst some argue that stricter policies in relation to KYC and AML could lead to difficulties for investors, any potential discomfort would likely pass quite quickly.
On the other hand, one should not underestimate the impact that this decision might have. Regulated and legitimate markets are far more attractive to institutional investors than unregulated ones. This comes as cryptocurrencies have already attracted huge banks, such as both Goldman Sachs and JPMorgan Chase. It is also entirely possible that this ”approval” of sorts from South Korean authorities could lead to increased cryptocurrency adoption in the Asian nation.
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Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the blockchain industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.