South Korea to Adopt OTC Crypto Regulations Amid $4B Unlawful Deal Concerns
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South Korean regulators have redirected their attention towards over-the-counter (OTC) cryptocurrency trades due to increasing concerns about their potential use in criminal activities.
Authority Bemoans Use of OTC for Money Laundering Endeavours
South Korea’s financial regulatory officers, including Deputy Chief Prosecutor Ki No-Seong and Park Min-woo of the Financial Service Commission (FSC), recently met to discuss legal concerns about virtual assets.
While the landscape of virtual assets was the major topic, the rise of irregularities in the unregulated over-the-counter market was addressed.
This was made public on September 17 by a local news report. According to the report, No-Seong stated that illegal virtual currency traded at OTCs is not regulated.
He cited that companies that process OTC markets have offshore corporations engaged in converting illegal digital assets to Korean Won or other foreign fiat currency.
The Deputy Chief Prosecutor iterated on the urgency of the unregulated OTC opening loopholes for money laundering schemes and other vulnerabilities.
Illegal Transactions Exposed
According to the published report, the Korea Customs Service cited 5.8 trillion Korean Won as the total amount of illegal virtual asset transactions last year.
At press time, there seems to be no new regulation announced or implemented yet. Currently, domestic virtual assets business operators cannot access or trade digital assets through OTC’s platforms, which is in accordance with Article 10 of the Specific Financial Information Act.
However, ordinary investors cannot be sanctioned for illegal foreign exchange transactions performed through OTCs, a major loophole criminals use.
The Asian nation has consistently tolled out tough crypto policies to mitigate recurring crypto-related crimes. Unfortunately, this has only bred a large scam tempest, notably the fall of Terra.
Crypto experts believe there will be a spate of aggressive rules to place a permanent fence over the OTC market in the coming weeks. But would this have a global impact on the digital asset landscape?
The United States (U.S.) seeks to enforce strict laws to protect investors and avert fraudulent schemes.
South Korea’s urgency of establishing clear and enforceable boundaries may propel other countries to choose between taking a backseat or integrating stringent rules to keep crypto-related crime at bay.