South Korea’s Crypto Market Faces Stricter Oversight as New Regulations Target Non-Compliant Exchanges and Illicit Activities
In Brief
South Korea is implementing a comprehensive digital currency regulation to combat scams, thefts, and speculation related to cryptocurrencies, aiming to create a more secure and transparent electronic assets market.
Having made a large investment in cryptocurrencies, South Korea is acting decisively to stop the rise in crimes connected to them. In response to a growing number of scams, thefts, and speculation cases, the South Korean government is strengthening its judicial arm and enacting its initial all-encompassing digital currency regulation, which is scheduled to go into effect in July 2024. This action is indicative of a larger initiative to create an electronic assets market that is more secure and open.
Developing the Unit for Investigation of Crypto Crime
The transformation of South Korea’s Joint Virtual Asset Crime Investigation Unit from a temporary agency to a permanent department is one of the main components of the country’s current agenda. This modification, which is anticipated to be completed in May, shows how committed the federal government is to combating illegal activity in the cryptocurrency space. Established in July 2023, the unit consists of around thirty professionals from a variety of monetary and fiscal regulatory bodies. Its investigation powers will be further enhanced by its advancement to a dedicated unit.
The division is going to be more prepared to handle the increasing difficulties brought on by activities connected to cryptocurrency if it has a particular amount of money and the authority to designate more investigators. This reorganisation coincides with an upsurge in illicit activity connected to cryptocurrencies and an increase in complaints of fraudulent transactions. In order to guarantee that the new department has the tools and power necessary for success, South Korea is acting proactively.
Cryptocurrency Takes Center Stage in the Political Arena of South Korea
The very first complete crypto law in South Korea is scheduled to go into effect on July 19, 2024. The goal of this new legislation is to regulate the formerly uncontrolled market for electronic assets, with a special emphasis on protecting investors and preventing manipulation of the market. The law imposes harsher punishments on those found guilty of manipulating the crypto market, with some offences carrying the possibility of life sentences.
The topic of crypto legislation has gained significant traction in politics as South Korea gets ready for its impending legislative elections. Rival political factions are vying with one another for the allegiance of cryptocurrency investors by putting out differing strategies for governing virtual assets.
In an effort to win over cryptocurrency aficionados, the ruling People Power Party, led by President Yoon Suk Yeol, has promised to postpone the introduction of digital asset taxation. This action is perceived as an effort to strengthen the party’s political prospects and win over the growing group of cryptocurrency investors. The party intends to appeal to a wider range of cryptocurrency enthusiasts and project a more favourable business image by delaying the tax.
However, in line with a more liberal and innovation-friendly position on digital assets, the opposition Democratic Party is pushing for the elimination of limitations on ETFs associated with crypto. Should this policy be implemented, new avenues for South Koreans could be created, and the domestic crypto market could even be brought back to life.
The Fundamental Regulatory Measures of South Korea
South Korea implemented stricter regulations for token listings on local exchanges and strengthened oversight over platforms in light of the rise in crypto-related activities. The country also intends to close any exchanges that do not comply with the Financial Action Task Force’s (FATF) suggested standards. The purpose of this improved regulatory structure is to preserve the integrity of the cryptocurrency industry and guarantee adherence to global norms.
The Joint Virtual Asset Crime Investigation Unit’s elevation and the adoption of extensive crypto policy, as well as South Korea’s dedication to combating crimes, represent a major step toward the development of a more secure and open online asset sector. The coming years of South Korea’s cryptocurrency scene are probably going to be defined by continuing conversations and public opinion, as political parties have made a point of highlighting their crypto policies in advance of the next legislative elections. The way the government strikes a balance between innovation and regulation will be a key factor in deciding the outcome of these initiatives and the stability of the South Korean cryptocurrency sector.
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About The Author
Victoria is a writer on a variety of technology topics including Web3.0, AI and cryptocurrencies. Her extensive experience allows her to write insightful articles for the wider audience.
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Victoria is a writer on a variety of technology topics including Web3.0, AI and cryptocurrencies. Her extensive experience allows her to write insightful articles for the wider audience.
