South Korea Progresses Bill to Provide Legal Foundation for Cryptocurrencies

South Korea’s National Assembly is progressing a bill that will provide a legal basis for cryptocurrencies in the country. The bill categorizes virtual currencies as digital assets and intends to bring regulatory clarity and transparency to crypto markets in South Korea, English-language newspaper Korea JoongAng Daily reports on Nov. 27.

According to the report, the bill was passed by the National Assembly’s national policy committee and still needs to be approved by the judiciary committee. If approved, the law would come into force in 2020, the report notes.

All crypto businesses will have to register with the Financial Intelligence Unit

Under the bill, all crypto-related businesses in South Korea would be required to register with the Financial Services Commission’s (FSC) Financial Intelligence Unit (FIU) and report to the authority. 

In order to be approved as a crypto firm in the country, crypto businesses will have to obtain an Information Security Management System certificate from the state-run Korea Internet and Security Agency, the report notes.

New bill aims to prevent money laundering and protect investors

The FSC stated that the legislation will make crypto markets more transparent and legitimize investment in digital assets. The authority stressed that the bill will require crypto-related businesses to prevent illicit practices such as money laundering.

Additionally, crypto firms will have to adopt their own monitoring systems for financial transactions in compliance with standards by the Financial Action Task Force. Those who fail to establish their own oversight systems will be penalized, the report notes.

The new bill is not the first attempt by South Korean authorities to provide an Anti-Money Laundering (AML) framework. In early 2018, South Korean regulators banned anonymous trading on crypto exchanges in line with AML and identification efforts in the country. The FSC subsequently released a set of revised AML guidelines for virtual currencies in June 2018.