The Korea Financial Intelligence Unit (KoFIU) has announced a broad plan to strengthen supervision of the crypto sector, which includes excluding crypto exchanges that do not meet strict operational standards, according to local authorities. media reports on February 12.
The move is part of South Korea's efforts to strengthen financial oversight and consumer protections in the rapidly evolving digital assets sector.
The new measures are part of KoFIU's overall strategy for 2024, developed after extensive consultations with industry stakeholders and policy advisors.
The announcement comes as the agency prepares to oversee the renewal of registrations for crypto exchanges, a process initiated following the establishment of an official registration framework in fall 2021.
Starting in 2024, KoFIU will intensify its monitoring and inspection of crypto exchanges, targeting those deemed unsuitable due to insufficient compliance with regulatory requirements.
The crackdown aims to purge the market of entities that pose risks to investors and to the integrity of the financial system. The regulator also revealed plans to thwart the entry of unfit virtual business operators by expanding market entry criteria.
This includes a new approach to pre-emptively suspend business activities suspected of being linked to financial crimes, even before formal investigations begin. The system complies with the practices recommended by the Financial Action Task Force (FATF).
The intensified regulatory review anticipates the upcoming Virtual Asset Consumer Protection Law, which is expected to take effect in July 2024. This landmark legislation aims to provide a safer and more transparent business environment for crypto users in South Korea. South.
Cryptocurrency exchanges in South Korea, recognized by the government three years ago, are expected to renew their licenses in the second half of the year.
KoFIU said it will conduct rigorous assessments in the coming months to assess the exchanges' compliance with anti-money laundering guidelines, their operational robustness in processing Korean won transactions and their consumer protection protocols. .
KoFIU Commissioner Rhee Yun-su highlighted the importance of these measures to ensure the healthy growth of the crypto market, saying:
“As we prepare for the enactment of the Virtual Asset Consumer Protection Act and face a significant number of registration renewals, it is crucial that we move forward with institutional improvements in order to maintain a robust and secure cryptocurrency sector.”
South Korea's proactive stance on crypto regulation reflects a broader global trend to establish clear legal frameworks for digital assets. By setting high standards in foreign exchange operations and consumer protection, the country is positioning itself as a leader in managing the complexities associated with the digital economy.
The regulatory overhaul is expected to strengthen market stability, protect investors and deter financial crimes in the crypto sector, making South Korea a central player in global digital finance.