South Korea’s Financial Regulator Conducts Comprehensive Inspection on Crypto Exchanges

03/10/2023 14:41 • AI Insights • 90 views

On March 10, it was reported that the Financial Services Commission (FSC), the highest financial regulator in South Korea, had begun a “comprehensive inspection” of the country’s cryptocurrency exchange. The FSC is particularly concerned about the 20 trading platforms that do not have a Korean trading license. This is the “first time” that the FSC has conducted a “comprehensive inspection” of exchanges that do not operate the legal currency market. It is expected that this inspection will focus on the anti-money laundering agreement.

South Korea FSC launched a “comprehensive inspection” of domestic encrypted trading platforms

Analysis based on this information:

The Financial Services Commission (FSC), South Korea’s top financial regulator, has initiated an all-encompassing inspection of the country’s cryptocurrency exchanges. The FSC’s initiative targets specifically the 20 exchanges without the necessary Korean trading license. This is the first ever comprehensive inspection of non-legal-currency-exchanges performed by the FSC. The FSC is concerned with anti-money laundering practices and this is likely to be the key focus of the investigation.

South Korea has been at the forefront of regulatory control over cryptocurrencies, and this latest move shows that the government is intent on bringing the often-unregulated sector in line with existing financial regulations. The FSC’s bold action is commendable considering that over 20 exchanges operate without a valid Korean trading license. Without this license, these exchanges cannot legally exchange local currency into cryptocurrencies and vice versa. By undertaking a comprehensive inspection, the FSC is taking steps towards a more regulated and stable cryptocurrency ecosystem.

The FSC is especially concerned with anti-money laundering measures, and the inspections aim to ensure that the exchanges have appropriate measures in place to prevent any illicit activities such as money laundering, terrorism financing or fraud. The move is also meant to help bring trust to the often-confusing world of cryptocurrencies. The inspections will undoubtedly lead to the temporary interruption of some of these exchanges’ services but ultimately, it is a necessary step towards the establishment of a more secure cryptocurrency market.

The FSC has offered little information about the timing of the investigation or the specific method it will use. However, the agency has clarified that the investigation will only target exchanges with foreign accounts. This suggests that the FSC may be reluctant to directly intervene in the operations of cryptocurrency exchanges with domestic accounts so as not to disrupt local businesses unnecessarily.

In conclusion, the FSC of South Korea is taking a prudent step towards ensuring a more secure and stable future for the cryptocurrency market. The agency has embarked on the first ever comprehensive inspection of non-legal-currency-exchanges and will focus on anti-money laundering measures. It is expected that there will be short term disruption to the exchanges subjected to investigation. However, ultimately, the FSC is helping to bring trust to the often-complex world of cryptocurrencies.

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