South Korea Initiates Crackdown on Suspicious Crypto Activities

Cryptocurrencies that fail to comply with South Korea’s regulatory guidelines could face operational challenges in the Asian nation.

Written by Radhika Parashar, Edited by Manas Mitul | Updated: 5 July 2024 11:39 IST

South Korea Initiates Crackdown on Suspicious Crypto Activities

Photo Credit: Pixabay/ Big_Heart

South Korea-based crypto trading platforms were asked to conduct maintenance reviews

Highlights

South Korea is gradually deploying laws to oversee the crypto sector
All crypto exchanges have been asked to process internal business audits
Exchanges in South Korea also asked to identify internal loopholes

South Korea is trying to rid its crypto sector off miscreants who are exploiting digital assets to facilitate illicit activities like money laundering. The country is conducting a crackdown on crypto activities that are coming across as suspicious or unusual on the crypto exchanges operating in the Asian nation. On Thursday, July 4, the Financial Supervisory Service of Korea released a statement alerting all crypto exchanges to ramp up transaction monitoring on their respective platforms.

Seoul has directed all crypto exchanges to enter required data and details into the Virtual Asset Unfair Trade Monitoring system. This system will be fully functional in the coming days. There's no clarity yet on the details the system would require from the exchanges.

This move from South Korea comes as the country's Virtual Asset User Protection Act is reportedly ready to go into effect on July 19.

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In an official statement shared on Thursday, the FSS said these measures were urgent and important to curb instances of abnormal crypto transactions by putting them under a constant scanner.

Cryptocurrencies that fail to comply with South Korea's regulatory guidelines could face operational challenges in the country.

South Korea's crypto plans

In June this year, the authorities of South Korea instructed all crypto exchanges to examine the cryptocurrencies listed on their respective platforms.

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These crypto trading platforms were also asked to conduct a thorough maintenance review of their internal operations to identify any security or technological loopholes.

To reduce the risk of financial instability that volatile crypto assets pose, South Korea also banned the purchase of cryptocurrencies through credit cards in January this year.

Asian nations focussing on crypto regulations

Digital assets have seen growth in Asia, owing to the culture of tech and gaming prevalent in countries like Japan, Vietnam, South Korea, and India. South Korea, under the circumstances, is not the only country that is intensifying its efforts to bring in effective laws to govern the digital assets industry.

India has also implemented a bunch of regulatory mandates over crypto firms to ensure that their services and offerings are not misleading citizens into unforeseen financial losses. All crypto firms wishing to operate in India, for instance, must first secure a registration with the Financial Intelligence Unit (FIU).

Japanese Prime Minister Fumio Kishida also doesn't shy from expressing support to Web3's growth and development in Japan.

A report by Chainalysis in 2022 had claimed that in the second quarter of 2022, 58 percent of Web traffic from Asian nations to crypto services was NFT-related, whereas another 21 percent traffic was related to play-to-earn blockchain games.

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Further reading: Cryptocurrency, South Korea, Crypto Regulations, Virtual Asset User Protection Act

Radhika Parashar

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Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More