South Korean banks have been instructed to treat cryptocurrency exchanges as high-risk clients by the country’s financial regulatory agency.
The Financial Services Commission (FSC) has instructed South Korean banks to treat cryptocurrency exchanges operating in the country as high-risk clients. The regulatory agency said the exchanges must be subject to increased transaction monitoring and ID verification.
According to the Korea Times, banks have been instructed to deny services to crypto exchanges that don’t comply with KYC requirements. Crypto exchanges that fail to report suspicious activity to the Korea Financial Intelligence Unit – the FSC’s anti-money laundering unit – will also be denied access to banking services.
The regulatory agency also rolled out a few regulations for crypto exchanges in South Korea to follow. Crypto exchanges are obliged to terminate transactions conducted by accounts that do not have real-names, or are based on those that haven’t verified their ID.
The Korea Times reported that of the 60 exchanges currently operating, only four are using real-name accounts that are in line with the set standards. South Korean regulatory agencies have increased their effort in the crypto space in recent months.
The cryptocurrency market has grown massively over the past year, and more regulatory agencies are now paying closer attention to activities in the industry. This latest regulation from the FSC comes at a time when South Korean exchanges are under heavy pressure to get their act together.
South Korean crypto exchanges have until 24 September to register as virtual-asset service providers (VASPs) with the regulatory agency. By registering with the FSC, the regulatory agency will be able to assess the legality of an exchange’s operations.
The cryptocurrency market continues to grow, with more retail and institutional investors coming into the market in recent months.
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Author: Hassan Maishera