South Korea’s government has released a definite set of guidelines in regards to Cryptocurrencies and its trading, investing and mining.
While there are many countries that have officially banned Cryptocurrencies, the transparency shown by the South Korean government is commendable. This helps in clearing the air of FUD ( Fear, Uncertainty and Doubt) that prevails in many other country markets.
Below mentioned are the guidelines that were release by them in a document.
- Converting to Real-Name System:
The South Korean government mandated ‘Real- Name Account System’ comes into play. Traders of cryptocurrency will have to declare their real names and details in order to further trade via the virtual accounts that were generated by banks to withdraw or deposit money. This comes as quite a shock to South Korean investors as Cryptocurrency trading is a decentralized market and to this date remains anonymous. The decision further states that from January 30th, the banks shall implement the Real – Name system. Six major banks shall implement the new system, which include Nonghyup Bank, Shinhan Bank, Hana Bank, Kookmin Bank, and Gwangju Bank.
This move is being collaborated with their pre-existing ‘KYC’ ( Know Your Customer) compliance. They aim to curb cryptocurrency speculation and regulate and further strengthen this market.
- AML and Suspicious Transaction Reporting
“ If the transaction amount is more than KRW 10 million per day, more than KRW 20 million for 7 days, or frequent transactions occur in a short time, it should be reported to the FIU, the money laundering monitoring authority. If the exchange has a high risk of money laundering or requires information, the bank may terminate the transaction.” said the South Korean Financial Intelligence Unit (FIU) representative.
Before, cryptos were not considered in their bid to curb money laundering. They also brought into notice that many Cryptocurrency exchanges had collected funds from users general corporate accounts. This was noted to be a sign for future fraud and embezzlement.
The FIU representative further stated, “Banks are needed to monitor the exchanges [they service] for unusual transactions in accordance with the guidelines and, if suspected of money laundering, further confirm the transaction purpose and funding source”.
The disclosure of these guidelines have already begun to have an effect on the cryptocurrency market. The price of Bitcoin has since crashed. The FIU has also penalized 8 top domestic cryptocurrency exchanges. These companies are said to have violated the Information and Communication Network Act, which mandates user privacy protection methods. To make matters more complicated, these 8 companies have been fined because they have failed to delete user’s data once they had stopped using their services and few even had a data of users who did not reside in South Korea.
While these guidelines don’t seem much in favor of the investor, they sure help clear the government’s stance and further help boost trade.
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