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South Korean regulators parley with 20 crypto exchanges

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Bitcoin and judge gavel laying on flag of South Korea. Bitcoin legal situation in South Korea concept. 3D rendering

Representatives of crypto exchanges last Thursday discussed with the South Korean authorities options for interaction in the field of ensuring transparency of trading.

According to local media, the Financial Services Commission initiated this meeting. During the discussion of options for cooperation, representatives of the exchanges expressed dissatisfaction with the repressive policy of the country’s leadership, and also expressed the hope that the regulator would soon soften its position.

Representatives of one of the financial intelligence units also participated in the negotiations. This structure is in favor of strengthening control over the cryptosphere and introducing a mechanism for identifying trading participants.

On May 28, the Financial Services Commission (FSC) unveiled its plan to improve market transparency. It provides for a six-month grace period for each exchange, so that it has time to register in a special database and obtain permission to trade. Those who fail to meet the deadline will be forced to close or face criminal prosecution under legislation that came into force this spring.

Difficulties of exchanges in meeting the requirements of the regulator

Representatives of 20 crypto exchanges, such as Upbit, Bithumb, Korbit, Coinone, Kordax, Coinncoin, Tennten, Poblegate and Flybit, participated in negotiations with the authorities, 16 of which said they may have difficulties in meeting the requirements of the regulator. South Korean exchanges require a banking partnership to fulfill the requirement to trade using real name. However, the cost of acquiring such banking partnerships is reportedly beyond the reach of many small platforms. Officials promised to analyze the claims of trading platforms and meet them halfway in order to facilitate the certification procedure.

The meeting was titled “Report Registration Consultancy”. The report noted that only Upbit, Bithumb, Korbit and Coinone met the “real name” trading requirements. These four crypto exchanges known in South Korea as the Big Four.

The following issues were also discussed at the meeting:

– Protocols of crypto-tax and tax reporting;

– Market manipulation;

– Storage of cryptocurrency;

– Possible recommendations for trading restrictions;

– A warning system for platforms that do not comply with the rules;

– Checking criminal history on platforms and employees.

Note that against the backdrop of strengthening control over the work of crypto companies, some exchanges began to leave South Korea and go to safe jurisdictions.

South Koreans with overseas crypto accounts will have to report their assets in 2023

South Korea’s National Tax Service said residents with accounts on foreign cryptoexchanges must report their crypto assets to tax authorities. The NTS noted that the foreign cryptocurrency rules will enter into force on January 1, 2022. And people should report on crypto holdings by June 2023.

The news follows the Financial Supervisory Service (FSS) tasked with spearheading efforts to regulate cryptocurrency in South Korea. Additionally, regulators in South Korea are concerned about the “kimchi premium” on certain crypto assets in the country.

We also note that from June 30, 2033, crypto holdings on platforms outside the country will be added to the list after adding a new clause to the Law on Reporting and Use of Certain Information on Financial Transactions.

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