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cryptocurrency December 28, 2017

December 28, 2017 11:13 PM

South Korea may pass a law giving its government the power to shut down cryptocurrency exchanges. Regulators in the country have also discussed beefing up the know-your-customer and anti-money laundering standards to which exchanges and the banks providing them services must adhere.

A December 28 press release from the South Korean government, issued by an office known as the “Department of Electronic Finance,” details a number of possible actions that the state may take in regard to cryptocurrency in order to curtail money laundering and protect Korean investors. News outlets including Reuters have reported that the memorandum mentions the justice ministry’s suggestion that the legislature pass a law granting the government power to shut down digital asset exchanges.

The document covers the proceedings of a meeting on the topic of “Virtual currency related financial sector inspection,” hosted by Financial Services Commission vice chair Kim Yong-Bum, which took place the same day the memo was published.

According to a translation, it was announced at the gathering that banks providing “virtual account services” to cryptocurrency exchanges and their clients are now prohibited from “adding new members to the virtual account.” Some news organizations have implied that the restriction applies specifically to new customers trying to engage with these platforms anonymously. 

Banks were also asked to develop a mechanism for confirming users’ identities and work with exchanges as they help their clients “quickly transfer” their accounts over “to the real name verification system.” The Financial Supervisory Service will establish a joint taskforce with participating banks once this system has been built in order to provide for a smooth rollout and “ensure that follow-up measures are fully taken.”

The press release also relates that banks should not “provide any type of payment service for the unauthorized virtual currency carrier that does not follow the government’s emergency measures,” which were laid out earlier in the month and include following certain know-your-customer and anti-money laundering protocols.

On December 20, the Fair Trade Commission began a three-day tour of “field surveys,” in which it paid visits to the thirteen “major” Korean exchanges in order to investigate their compliance with current regulations.

Quotes translated from Korean using Google Translate.

Adam Reese is a Los Angeles-based writer interested in technology, domestic and international politics, social issues, infrastructure and the arts. Adam is a full-time staff writer for ETHNews and holds value in Ether and BTC.

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Source: ETHNews