South Korea has passed a crucial digital currency-related bill on Thursday, legalizing crypto trading in the country.
March 5, 2020 | AtoZ Markets – South Korea’s parliament has officially recognized crypto trading as legal in the country. The move, however, comes after two years of deliberations into how to develop concrete guidelines for cryptocurrencies.
South Korea new law gives green light to crypto trading
According to The News Asia, South Korea’s National Assembly passed an amendment to its Reporting and Use of Specific Financial Information Act, legalizing cryptocurrency trading. Moreover, local South Korea media outlet Maeil Kyungjae revealed that the motion to amend the bill received unilateral support with 182 votes in favor and zero against.
The law will come into 12 months from the signing date. It also comes with a further 6-month grace period for crypto exchanges to comply with the new regulatory paradigm. Hence, by September 2021, all South Korean crypto exchanges and wallet providers will have to abide by the new laws.
As part of the amendment, crypto exchanges and other businesses must comply with the same reporting requirements as other financial institutions. According to reports, the amendments legalizing crypto trading in South Korea contain similar provisions to the guidelines already established by the Financial Action Task Force (FATF).
Crypto exchanges will have to comply with KYC
While crypto trading is effectively legalized in South Korea, the news comes with added compliance costs. As part of the new laws, all virtual currency businesses must comply with know your customer (KYC). They will also have to implement counter-terror financing (CTF) provisions and anti-money laundering (AML) requirements in tandem with commercial banks.
The Special Financial Information Law requires local exchanges to obtain an information security management system (ISMS) license from KISA. This, however, might weed out many small exchanges that only opened businesses to ride on the bullish trend of crypto.
Notably, only six exchanges – UpBit, Bithumb, Coinone, Korbit, Gopax, and Hanbitco – currently operating in South Korea have obtained an ISMS license from KISA.
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