South Korea gets fully behind its growing Bitcoin industry

South Korea’s Financial Services Commission is fast-tracking the activation of new legislation that legitimizes the cryptocurrency sector, by working with local crypto firms.

The Special Financial Information Law, which requires crypto businesses to register with local financial authorities and adhere to Financial Action Task Force (FATF) guidelines, will officially come into effect in March 2021. The bill legitimizes South Korea’s crypto sector by officially implementing strict policies on crypto-related companies for the first time in the nation’s history.

South Korean crypto firms need licenses to operate

In the meantime, crypto exchanges and service providers are required to register with Korea’s Financial Intelligence Unit (FIU) and receive a license from the Korea Internet & Security Agency (KISA) to continue operating in the local crypto market.

“The Special Financial Information Law prevents money laundering and criminal activities using digital assets, and it complies with international standards for digital asset regulation,” an FIU spokesperson said. “The FIU will work closely with other financial agencies to active the legislation swiftly.”

South Korean crypto exchanges will also be asked to secure a contract with local commercial banks to provide virtual banking accounts to exchange users, prior to registering with the FIU. Virtual bank accounts enable crypto exchanges to process withdrawals and deposits instantaneously.

Other countries are tightening crypto regulation

Countries around the world are adopting different approaches to crypto regulation. So far, Hong Kong, Japan, and Singapore have adopted cryptocurrency regulatory frameworks that comply with FATF guidelines, while India’s Supreme Court has overturned the Reserve Bank of India’s ban on crypto businesses.

However, some countries are still moving towards a blanket ban on crypto trading, despite the FATF’s recommendation that countries adopt unified global regulatory standards for digital assets. Although Russia has previously teased crypto legislation, the Bank of Russia’s head of legal office Alexey Guznov said it is considering an outright ban of both cryptocurrency trading and issuance.