South Korea to Enter Phase 2 of Crypto Law

On Sept. 20, South Korea’s Financial Services Commission (FSC) confirmed its support for advancing the second phase of crypto-related legislation. The FSC emphasized the importance of maintaining a “level playing field” as the virtual asset industry increasingly interacts with traditional finance. 

According to Digital Today, FSC officials stated, “The regulatory framework will address business activity regulations and real-name accounts for corporations and institutions.”

A key part of the new legislation under discussion is the introduction of real-name accounts for corporate entities involved in virtual assets. FSC officials highlighted that this measure aims to “increase transparency and accountability” in a market largely dominated by individual investors. Furthermore, the new regulations will set clearer operational and qualification standards for virtual asset service providers.

Focus on Global Compatibility and Investor Protection

South Korea’s latest legislative efforts also address security tokens and central bank digital currencies (CBDCs) challenges. Officials are considering amending the Capital Market Act to provide clearer guidelines for digital assets. FSC representatives noted that the Commission is focused on aligning its regulations with global standards, saying, “We are working to ensure compatibility with international regulatory frameworks and to foster robust investor protection.”

The FSC has pointed out that stricter anti-money laundering (AML) and know-your-customer (KYC) protocols will be integral to the new regulations. The Commission explained, “The updated regulatory approach will include comprehensive AML and KYC procedures, enhancing the security of virtual asset transactions.”

The FSC also expressed the need for international cooperation to ensure South Korea’s crypto regulations are consistent with those of other countries. “Collaboration with global regulatory bodies is essential for reducing the risk of regulatory arbitrage,” stated FSC officials.

Seizure of Assets Related to Crypto Fraud in South Korea

South Korea’s Joint Virtual Asset Investigation Team reported seizing $107 million in assets linked to crypto-related fraud last year. Based in the Seoul Southern District Prosecutors’ Office, the unit has arrested 18 individuals and indicted 41 concerning the fraudulent activity. The team, including members from the Financial Supervisory Service, the Korea Exchange, and the National Tax Service, has confiscated luxury assets such as supercars and properties in high-end areas like Gangnam.

The investigation unit’s work has focused on high-profile cases, with officials noting, “The team has dealt with numerous instances of crypto fraud, leading to significant asset seizures and multiple arrests.”