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Crypto exchanges to register with anti-money laundering Organization in South Korea

Cryptocurrency exchanges headquartered outside of South Korea must register with the country’s anti-money laundering Organization if they use the Korean currency, according to Financial Services Commission Chairman Eun Sung-soo.

Eun Sung-soo made the remarks in response to a question from a lawmaker about whether Binance, the world’s largest cryptocurrency exchange, should comply with a revised law that comes into force in September.

The revised law, which went into effect in March with a six-month grace period, requires banks to open real-name accounts to prevent money laundering. Banks will evaluate a cryptocurrency exchange’s transparency, business risks, and potential for criminal activity under the rule. Eun said,

If a cryptocurrency exchange serves local customers with the won-currency settlement, it must register with the (Korea) Financial Intelligence Unit

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Despite repeated warnings from lawmakers, Korean investors have been purchasing virtual currency in large quantities because they see it as a financially rewarding asset amid the pandemic. More young people are investing in cryptocurrencies, expecting higher returns, with some claiming they cannot afford to buy a home with their income alone due to rising home prices.

Minor cryptocurrency exchanges, estimated to number around 100, have been luring investors with ambiguous accounts. These accounts allow cryptocurrency exchanges to monitor their investors’ funds through their bank accounts. Minor cryptocurrency exchanges will be barred from withdrawing funds for cryptocurrency trading beginning September 25 if they do not have genuine bank accounts.

Related: Kyle Bass believes that Chinese Digital Yuan is a financial weapon

Recently, Woori Financial Group became South Korea’s third major banking group to enter the digital asset custody services (DACS) industry. Following KB Financial Group, Shinhan Financial Group, and NH Nonghyup Bank.

Koo Yun-Cheol, chief of government policy coordination under the Prime Minister’s office, previously declared that South Korea plans to inflict a 20 percent income tax on capital gains from cryptocurrency after the vice-ministerial interagency meeting transactions starting next year.

The reason for tax impose is that authorities aim to stop illegal projects from being funded with digital assets. Last year, South Korea made changes to its anti-money laundering and financial reporting laws to include cryptocurrencies. The government has also said cryptocurrencies bring more danger and are more speculative than other asset classes.

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