Financial authorities have asked banks to declare their cryptocurrency businesses to figure out the exact numbers of cryptocurrency exchanges operating in the country, as it tightens its grip over illegal activities in the industry, according to local media reports Wednesday.
The financial regulators asked major banks to provide the current status of their businesses with cryptocurrency exchanges including corporate accounts and banks’ monitoring methods.
Financial Services Commission Chairman Eun Sung-soo speaks during a meeting of the National Assembly’s National Policy Committee on April 24. He said there are about 200 crypto exchanges in the country. (Yonhap)
“Currently, cryptocurrency exchanges can operate without permission from the government, which is why it is difficult to identify the exact number of cryptocurrency exchanges,” said an official at a local cryptocurrency exchange who asked to remain anonymous. “One way to find out is to track corporate bank accounts that collect customers’ funds.”
Except for the four largest cryptocurrency exchanges that already use real-name accounts for each user, smaller exchanges gather funds from users under one corporate bank account. The sources did not specify which financial institutions gave the order.
The regulators’ move to identify the exact numbers of digital coin 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.
The new law requires crypto exchanges to be equipped with information security management systems and to form partnerships with local banks before the grace period.
In addition, cryptocurrency businesses will have to report to the financial authorities to operate legally. Those who fail to report to authorities and continue to operate after Sept. 24 will face a jail sentence 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.
On Tuesday, the police raided cryptocurrency exchange V Global and froze the company’s assets worth 240 billion won. The company is being accused of illegally gathering 1.7 trillion won by guaranteeing a high return for a digital-asset investment project and attracting investors into a Ponzi scheme.
The raid came one month after a group of government bodies vowed to crack down on illegal activities related to virtual asset transactions.
By Park Ga-young (email@example.com