First, it was India, now South Korea has taken a positive step towards cryptocurrencies. The recent amendment of the Act on Reporting and Use of Specific Financial Information passed today during a session of the National Assembly, which officially allows crypto trading and holding.
After 2-years of deliberations, trial and error, South Korean lawmakers officially passed this amendment, which provides crypto traders official entry into the legal system of the country, according to The News Asia. However, this new amendment requires crypto exchanges to comply with the legal requirements.
For the amendment to be enacted, it still needs an official sign-off by President Jae-in Moon. Once he signs the amendment, the enactment process will begin one year from then, including a 6 months grace period. It also means the crypto exchanges have to be in full compliance by Sept. 2021.
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Up until now, crypto exchanges in South Korea have been self-governing. But now, exchanges, wallets, trusts, along with ICOs will be required by law to verify their customers with a Korean bank that has been endorsed to prevent money laundering. The verification system of real names went into effect in early 2018, by South Korea’s top financial regulator Financial Services Commission (FSC).
Information security management system (ISMS) certification will need to be acquired from the Korea Internet Security Agency (KISA) by all Crypto-related companies. Once crypto companies obtain these credentials, they will be legally allowed to operate within S.Korea. It’s a costly certification to obtain, however, with all exchanges now need to require one, or they will run the risk of shutting down.
While individuals like Hanbitco’s CEO, Sunga Kim, have applauded this new development, adding that,
“a foundation has been created to wash away the stigma of cryptocurrency exchanges, fraud, and debauchery and establish itself as a transparent and reliable industry. It will lead the development of the industry with the inflow of new capital.”
Others haven’t been so optimistic about the scrutiny and tighter regulations.