The regulation of cryptocurrency exchanges will now be controlled by the South Korean government. This decision was announced by the Korea Financial Intelligence Unit (KFIU) Director Kim Geun-ik on June 8 during the Public Advisory Council Meeting.
The Korea Financial Intelligence Unit (KFIU), as well as other financial agencies, will be the ones who will regulate cryptocurrency exchanges through the proposed stricter regulations on the local and commercial banks in South Korea.
According to the KFIU Spokesperson, “Under current regulations, there are clear limitations in preventing money laundering on crypto exchanges because the only way authorities can spot suspicious transactions is through banks. 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.”
In line with this, the government will impose certain laws within the cryptocurrency exchanges to prevent the high risk of laundering crimes and to prohibit criminals in utilizing cryptocurrencies as a way of financial frauds and scheme operations.
Also, Director Kim Geun-ik was determined to give security through intense verification processes in large transactions on crypto in order to stop the terrorism financial schemes and money laundering just like what the leading countries like the USA are doing in their government.
Furthermore, KFIU also stated that their agency will ask for help from the Congress to pass a bill that would make cryptocurrency investors transparent and to authorize local financial agencies to monitor bank accounts.
Recently, to operate cryptocurrency exchanges in South Korea, an amount of $40 license as a communication vendor will be the only paid fair. This resulted in a massive number of illegal cryptocurrency exchanges and fraud cases in the country.
While the negotiations and revisions are happening in the government, Ripple Senior Vice President Eric van Miltenburg suggests that South Korea must not be too harsh or strict on its new regulations and implementations to be able to have the same innovation of crypto they want in the market.
“We just think it needs to be a regulation that balances the need to protect consumers without stalling or prohibiting innovation. We’ve seen that in other countries and in other technologies where you found a balance. Frankly if you think back to the early age of the internet, there were some people that only looked at the negative aspects of the internet saying we should shut it down for a while until we figure out what’s going on, and what’s good and what’s bad,” Miltenburg said in The Korea Times.
Having regulations from the government in the cryptocurrency business can have its bad and good effect in the country. Good is that the government will rule what is illegal and will have more legitimate transactions in the field of cryptocurrency, while the bad side is that the users and investors may feel controlled by the government if the imposed regulations are too strict.