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Korean financial regulator demands stock exchanges comply with identity verification, AML procedures to maintain license Local industry expert says authorities have stepped up pace to demand compliance
Tightening regulation of Korea’s anti-money laundering rules will mean that smaller exchanges will no longer be able to compete in the market, a Korean digital asset expert said.
The Korea Times reported on Sunday that the country’s Financial Services Commission, its financial regulator, said banks should treat crypto exchanges as high-risk customers and be subject to heightened identity verification and oversight requirements. transactions. Banks will be required to deny services to customers who have not incorporated identity verification requirements, by linking every account on their platform to a real, verified name.
Earlier, the Korean regulator said the exchanges must partner with a traditional bank in order to maintain fiat access ramps. By September, all exchanges must register as Virtual Asset Service Providers (VASPs) and the regulator will review each to determine if they comply with local law. In turn, this has sparked considerable interest in the Korean digital asset market from domestic and international institutions as a way to give the industry the scale needed to comply.
Oleg Smagin, Global Business Manager at Delio, a Korean cryptofinance platform, told Blockworks in an interview that the government’s rhetoric has recently changed. Because the corporate culture is so risk averse, he expects near universal compliance with these new rules, but this could come at the expense of smaller exchanges.
After the Financial Services Commission recommended strengthening oversight of crypto-related transactions, a few banks withdrew plans to partner with crypto exchanges, making it even more difficult for second-tier exchanges to comply. to real name account regulations coming in September, he mentioned.
Smagin also said that regulators’ assessment that digital assets have no intrinsic value and that all local crypto exchanges may soon disappear has also dampened market enthusiasm.
So far, only four of the country’s 60 crypto exchanges use real-name accounts and would be considered legal compliant.
The largest exchange in Korea is Bithumb, which has a daily volume of just under $ 1 billion according to CoinGecko.
Morgan Chittum contributed to this report.
Sam reynolds
Blockworks
Journalist
Sam Reynolds is a Taipei-based journalist who covers digital assets and regulation across Asia. Prior to joining Blockworks, he was an editor at Forkast News and an analyst at IDC.
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