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Korea Financial Services Commission: Encrypted currency transactions require consumer protection, otherwise they will be prosecuted

The South Korean Financial Services Commission (FSC) finalized the regulation of cryptocurrency exchanges. The proposal was made after the "Bitcoin Regulation Act" by the lawmaker Park Yong-jin. Meanwhile, the South Korean prime minister also expressed concern about the development and risks of cryptocurrencies, such as Bitcoin, and urged relevant departments to take immediate measures.

Encrypted currency exchange regulation

FSC finalized the Encrypted Currency Exchange Regulation Act. It is reported that the new act would treat the operation of "crypto-currency exchanges such as Bithumb, Coinone and Korbit as unauthorized fundraising."

Currently, cryptocurrencies are regulated by the Consumer Protection Act for Electronic Commerce. In other words, as long as you register as an online supplier, the exchange can operate as an e-commerce website. And FSC treats cryptocurrency as an unauthorized fund-raising method rather than as a financial instrument, meaning that the agency recognizes cryptocurrencies that have been traded around the world. In addition, the committee also set a few specific rules for the operation of the exchange. A FSC official said:

Cryptocurrency exchanges must comply with consumer protection guidelines, such as storing users' funds independently; increasing the transparency of funds processing, such as setting up specific verification processes to confirm user identities. The authorities have the power to sue those who violate the rules of the exchange.
In August of this year, Park Yong-jin , a Democratic lawmaker in South Korea, proposed an amendment to the Electronic Financial Transaction Act . He suggested entering the field of digital money, including the operation of cryptocurrency exchanges, that must first get FSC's permission.


Anti-money laundering measures

On Tuesday, FSC also announced its anti-money laundering policy at the National Bank Federation. More than 200 officials representing law enforcement and the Korean Customs Agency attended the meeting.

Four anti-money laundering policies were announced at the meeting, including a ban on the application of bitcoin to money laundering. Kim Yong-beom, FSC Vice Chair, mentioned:

We will establish a management system based on the money laundering risk of new products to enhance the security of financial transactions.
We will draft detailed measures to prevent encryption currency such as bitcoin from becoming a new channel for money laundering.

Prime Minister's concerns

According to reports from Babbitt , the South Korean prime minister expressed concern over cryptocurrencies at a recent cabinet meeting.

He pointed out that the problem of drug trafficking and pyramid selling involves currency confusion and stressed that the best time is now to study these issues.
Virtual currency is speculahtive. Bitcoin prices have surpassed 11 million won, trading volume also exceeded the Cosdak. If left unchecked, it will lead to serious social distortions and pathologies.
Fundamentally, bitcoin and virtual currency are problematic.
He said that at present the FSC is already discussing this topic with several national departments. He stressed that it is necessary to carry out comprehensive research and analysis on crypto-currency and ICO issues at present.