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South Korea's Finance Watchdog Is Forming a Crypto Division

South Korea’s Financial Services Commission (FSC) has revealed it is setting up a department dedicated primarily to cryptocurrencies and blockchain.

The FSC said the new department – dubbed the Financial Innovation Bureau – will focus on developing policy-making initiatives for the domestic blockchain and fintech industry, The Korea Times reported on Thursday.

An FSC official was cited as saying:

“The new Financial Innovation Bureau will … be tasked with policy initiatives for financial innovation, such as innovating financial services using fintech or big data, and responses to new developments and challenges such as cryptocurrencies.”

Perhaps surprisingly, though, the body will exist only temporarily, with a two-year lifespan.

The decision to set up the temporary bureau was reportedly made during a meeting of financial regulators and the Ministry of the Interior and Safety.

“The FSC plans a major organizational reshuffle to better protect financial consumers and proactively respond to financial innovation in the Fourth Industrial Revolution era,” said the FSC official.

The move by the finance regulator come amid a growing effort in the country to develop new laws to regulate the blockchain industry after somewhat knee-jerk reactions in the past.

Notably, South Korea outlawed initial coin offerings last year. However, in May, the nation’s legislative arm of government pushed for the removal of the ban, officially proposing legislation to permit ICOs as long as investor protections are put in place.

Earlier this month, it was also reported that members of different political parties are expected to submit bills focused on regulating cryptocurrencies, initial coin offerings and blockchain. That follows moves by regulators to tighten rules to reduce the likelihood of money laundering and improve the domestic exchange industry following a number of hacks and cases of embezzlement.

Korean won detail image via Shutterstock

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South Korea Confirms Plans to Ease Crypto Trading

Over the past six months or so South Korean lawmakers have been sending mixed messages over cryptocurrency regulations. One day we read about a Bitcoin crackdown, the next day trading goes on as normal. What happens in South Korea impacts the entire market since such a high percentage of trade volume occurs on exchanges in the country.

This week the news has been positive despite the current market correction. According to local media the newly appointed Financial Supervisory Service (FSS) Governor, Yoon Suk-heun, has said the country’s top financial regulator will consider relaxing cryptocurrency regulations. Following appointment to the government agency, which was submitted by the Financial Services Commission (FSC), Yoon told reporters; “Regarding cryptocurrencies, there are some positive aspects,”

This suggests that more focus will go towards the implementation of more practical regulations to cultivate a stable crypto trading environment which in turn will benefit the economy over all. Yoon is known as an activist and reformist so subtle changes towards regulating the crypto industry are likely to be positive ones.

He went on to state that his department, the FSS, would collaborate with the FSC to inspect existing financial market regulations and current policies for cryptocurrency trading. Previously retail traders were prohibited from using anonymous accounts and had to supply real name and bank account information for greater transparency and to prevent money laundering and criminal activity.

An official from Bithumb, South Korea’s second most popular crypto exchange, said;

“Markets expected the introduction of the real-name registration system would have been helpful to revive trading, but these efforts failed as local banks were reluctant to invite more crypto traders. The daily transactions of cryptocurrencies plummeted to around 400 billion won from 4 trillion won before the financial regulators implement the new regulation,”

Officials from Upbit, the largest exchange in the country with over $1 billion in daily volume, added.

“We don’t oppose regulations. But you can’t entirely kill the markets by simply imposing regulations. What the new FSS chief should think about is how the regulators should provide remedies to help crypto trading and blockchain technology get better,”

A group of lawmakers are currently working towards a bill that will eventually rescind the existing blockade of initial coin offerings and permit ones that meet certain criteria and conditions set out in the regulatory framework. Mood in South Korea is very positive at the moment as the country is set to join Japan, Singapore and Hong Kong as an Asian crypto powerhouse.

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Korea to Inspect 3 Banks Over Crypto Exchange AML Compliance

South Korea financial regulators have confirmed a plan to inspect three domestic banks over their compliance with recently introduced anti-money laundering rules for cryptocurrency exchange accounts.

According to a statement on Monday, the Financial Services Commission (FSC) and the Financial Intelligence Unit (FIU) will conduct on-site inspections on the NongHyup, KB Kookmin and KEB Hana banks from April 19 to 25.

Early this year, the FSC prohibited domestic banks from offering virtual, anonymous accounts to cryptocurrency exchange customers from February in a bid to prevent money laundering and illegal capital outflow via cryptocurrencies.

Since then, at least six banks – NongHyup, KookMin, Shinhan, KEB Hana, IBK, and JB – have been developing their implementations of the new procedures, three of which will be inspected later this month.

Notably, among those institutions up for review, NongHyup Bank has been providing the real-name verification process for two major cryptocurrency exchanges in South Korea, Coinone and Bithumb.

The focus of the inspection will be whether the banks have fully complied with the new real-name verification rules for cryptocurrency exchanges in South Korea, including the number of accounts held by these exchanges and the respective amount of deposits, the regulators said in the announcement.

The plan follows a previous on-site inspection conducted by the financial watchdogs in January and also confirms a previous report on March 22 hinting that regulators may soon launch a second probe this month.

In addition, the FIU also urged other financial institutions not included in the inspection this time to conduct their own checks in an effort to comply with the new anti-money laundering and real-name verification guidelines.

Korean won image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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South Korean Financial Watchdog Touts Blockchain in Fintech Plans

The South Korean Financial Services Commission (FSC) has aired plans to encourage the use of blockchain technology in new payment systems aimed to better protect user information.

According to Korea JoongAng Daily, the FSC will introduce new regulations to open the doors for banks and insurance companies to protect customer data and simplify verification processes with blockchain solutions.

FSC Chairman Choi Jong-ku told reporters this new blockchain-friendly approach to its fintech policies could give the local jobs market a boost, saying:

“The players in the financial service market are becoming more diverse, with new companies entering, and the competition in the financial market is becoming fiercer. … Fintech is an area that requires new technologies, and it will solve the youth job problem by increasing job positions for young people.”

As part of its fintech roadmap, the FSC will also allow more small and medium-sized companies to access more customer data through digital payment systems. Regulators hope this move will inspire new products and services in the burgeoning fintech sector.

The government also plans to approve a more accessible payment system called “app-to-app,” which lets users make purchases from sellers via apps, avoiding paying fees to credit card companies or card network providers. Banks will still take fees, however.

For example, a PayPal-backed startup called Toss has been experimenting with app-to-app payment options for Korean customers in Seoul and Jeju since last July. The firm added support for mobile bitcoin transactions in 2017.

Meanwhile, the Korea Times reports that local regulators may soon issue new and less harsh cryptocurrency regulations for initial coin offerings, having banned them in September of last year.

 South Korea flags image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.