South Korean financial regulators have asked banks to declare their cryptocurrency businesses to figure out the exact numbers of crypto exchanges operating in the country, as it tightens its grip over illegal activities in the industry, according to local media reports. The Korea Herald quoted a crypto exchange official saying, “currently, cryptocurrency exchanges can operate without permission from the government, which is why it is difficult to identify the exact number of cryptocurrency exchanges.”
Regulators seek to grasp a full picture of the crypto industry.
Except for the four largest crypto exchanges in South Korea that already use real-name accounts for each user, smaller exchanges gather funds from users under one corporate bank account. It is not revealed which financial institutions gave the order. The regulators’ move to classify the exact numbers of local crypto exchanges, vaguely estimated between 100 and 200, is so that they will be able to impose sanctions on unregistered businesses from Sept. 24 when the grace period for the revised Act on Reporting and Using Specified Financial Transaction Information ends.
Law requires crypto exchanges to form partnerships with local banks before the grace period.
The new cryptocurrency law requires crypto exchanges to be equipped with information security management systems and form partnerships with local banks before the grace period. In addition, crypto businesses in South Korea will have to report to the financial authorities to operate legally. Those who fail to report to authorities and continue to operate after the grace period will face a jail sentence of up to five years or a fine of up to 50 million won ($44,000). While the government is trying to get the lay of the land in the cryptocurrency industry, it is also ramping up its efforts to crack down on illegal activities.