The Financial Services Commission (FSC) stated that crypto exchanges that do not meet the set regulations will be made to pay fines henceforth. “Financial institutions and VASPs will be subject to penalties if they are […] in violation of internal control duties,” the commission stated.
The fine proposal was made by the Commission and will be implemented after April 20 when the regulation has been finalized.
Crypto exchanges to keep records of transactions
FSC also added that there will be various levels of fines over failure to verify the identity of exchange users, adhering to regulations on data retention, as well as internal controls.
Crypto exchanges and other digital asset providers in South Korea are also expected to have a record of the crypto transactions of their users. Additionally, they are mandated to file reports and provide details over any suspicious transaction.
However, the aspect where the exchanges are to identify the identity of their users may not be welcomed in the industry. Some have argued that such rules may go contrary to their principles and can be regarded as interference on users’ privacy.
Hefty fines slammed on violators
The commission has also determined the penalties for violators, and it has been considered too much for the growing crypto industry. The fines for those who violate the regulation have been placed between 30 million won ($26,000) and 100 million won (roughly $88,000).
However, the commission has a clause that slashes the penalties almost by half if the violation was a result of an erroneous breach. There are also lower penalties, but these are only applicable to small-scale businesses.
Some crypto exchanges have already started adjusting their policies to take care of these new regulations. Crypto exchange Bithumb has put policies in place when it comes to anti-money laundering activities. The exchange had banned users from countries that haven’t implemented anti-money laundering rules.
It has also blacklisted users from neighboring countries Iran and North Korea. Other countries on the exchange’s watchlist include Yemen, Pakistan, and Botswana. Earlier, South Korea’s Ministry of Economy and Finance raised its crypto tax to 20% for crypto investors with revenue of over 2.5 million won (about $2200).
