In a recent development, the South Korean government has come up with new policies to control crypto exchanges in the country. The financial regulator will now be supervising bank accounts used for crypto transactions.
The Financial Services Commission also informed that it would be keeping a close look over the deals between local and foreign exchanges. It should be noted that money launderers have been using digital currencies through foreign entities. Thus, criminal organizations are able to operate outside the jurisdiction of their respective governments.
However, most of the nations have been communicating through a common reporting standard, but it has not been able to able to provide real-time information to the concerned authorities.
Thus, to make up for the negatives FSC will have to be managing its own local exchanges by auditing wallets to curb any suspicious activity. As blockchain technology has been developed to provide transparency in operations, such activities will not be very complex. But, we should not ignore that most of the exchanges manage multiple digital coins like Upbit which lists Zcash, PIVX, Monero, Zcoin, etc. that can easily mask illegal activities.
Although some would consider it as a harsh decision on South Korean government’s front but it will not likely bother crypto flow in the country as it happened in the case of Bithumb and Upbit. At that time, the authorities had to give clearance to both the exchanges over illegal activities other than a huge amount of tax bills.
A tax official then stated, “The NTS conducted a tax investigation on Bithumb for the 2014 to 2017 business years. I know that Bithumb decided to pay taxes without any objection to the imposed tax amount. However, even though a large amount of tax was imposed, no charge of tax evasion was found, so prosecution charges against [Bithumb] were not carried out.”
Bithumb had a tax liability of 30 billion won which amounted to almost $28 million. But, the tax bill should not be considered as a problem for the exchange as it charges 0.3 percent as average fees on more than $250 million every single day. Thus, the company is able to raise $750,000 each day which would amount to a jaw-dropping amount of $274 million every year.
The issue of privacy coins and their handling has made monitoring more so important. The authorities are bound to doubt an event where there is no balance in the amount of fund entering and leaving an exchange platform, but privacy coins are still enjoying a high trade volume.
Back in January, the country launched an authentic trading system to curb the issue of anonymous bank accounts used in crypto trading. Hence, cases of money laundering and other illegal activities decreased considerably. It was also part of government’s plan to discourage speculative investment in digital coins.
Keeping in mind the regulatory structure, crypto potential and current situation in the Korean market it is hard to believe that bank accounts were not used for unlawful exercises. Being a hotspot for digital tokens authorities had no option but to increase their control over the traditional banking system.