South Korea has emerged as a crypto-friendly nation in recent times, taking measures to safeguard its crypto community from financial risks. In a fresh development, the authorities there have opened a probe on 16 crypto exchanges for ‘illegally operating’ in the country. These exchanges include Kucoin, MEXC, Phemex, XT.com, Bitrue, ZB.com, Bitglobal, Coinw, Coinex, AAX, Zoomex, Poloniex, BTCEX, BTCC, Digifinex, and Pionex. All of the named crypto exchanges are headquartered outside of South Korea and have been accused of conducting illegal business activities.
Seoul’s financial intelligence unit the Korea Financial Intelligence Unit (KoFIU) is responsible for alerting authorities about the foreign crypto exchanges, that have allegedly been running their businesses in South Korea without getting registered.
The KoFIU had instructed all foreign crypto exchanges to disclose themselves before July 22. These 16 crypto exchanges, however, failed to do so and continued operations.
“The KoFIU has requested the Korea Communications Commission and the Korea Communications Standards Commission to block domestic access to the websites of unregistered virtual assets service providers (VASPs) to prevent the use of virtual asset services provided by unregistered entities,” South Korea’s Financial Services Commission (FSC) said in an official blog post.
According to South Korea’s laws, illegal business activities of unregistered entities could cost their representatives a maximum of five years of imprisonment or up to KRW50 million (roughly Rs. 30 lakh) in fine.
In addition, these companies could also be barred for applying for operational licences in South Korea for a specific time period.
“Transfers of virtual assets to and from the 16 unregistered entities will be made impossible as the authorities have issued an administrative guidance requiring suspension of transactions between the registered and unregistered entities,” the FSC’s blog post added.
The KoFIU has vouched to continue to closely monitor illegal business activities carried out by unregistered entities and maintain close cooperation with relevant authorities in taking necessary measures by immediately reporting to the investigative authority.
In a bid to make its financial ecosystem more nurturing for crypto companies, the Asian nation has decided to delay the imposition of a 20 percent tax on crypto earnings till 2025.
The government of South Korea is planning to invest over $177 million (roughly Rs. 1,372 crore) in supporting metaverse projects that will also trigger job opportunities in the sector. The country is betting on the “indefinite potential”, it believes, the metaverse industry holds.
In fact, in a bid to safeguard its crypto investors against industry mishaps and scams, South Korea’s Financial Supervisory Service (FSS) has decided to take on the mantle of analysing the risk characteristics of domestic virtual assets to manage risks in the virtual asset market.