To control the rise of crypto-related crimes and the need for enhanced investor protection, South Korea has taken significant steps to safeguard its virtual asset market. The latest move involves the establishment of an interagency investigation unit and the introduction of groundbreaking legislation to combat illicit activities in the crypto space.
According to local news media, Yonhap News, the Seoul Southern District Prosecutors Office has officially launched the Joint Investigation Centre for Crypto Crimes, a joint initiative comprising 30 investigators from seven government agencies and bodies, including the prosecution, Financial Supervisory Service, National Tax Service, and Korea Customs Service, among others.
According to Prosecutor General Lee Won-Seok’s statement, the virtual asset crime syndicate aims to ensure the initial virtual asset market remains stable and safeguard it against risks that may arise. The unit will focus on expediting the investigative process for crypto-related criminal cases, from detection and analysis to handling.
This initiative coincides with the passing of South Korea’s pioneering legislation at the National Assembly, specifically designed to protect crypto investors from unfair trading practices and market manipulation. The new law introduces stringent penalties, including prison sentences and fines, for individuals engaged in illegal activities concerning virtual assets.
The Korea Securities Depository and Code have formed a strategic partnership to promote the use of Legal Entity Identifiers (LEI) in the virtual asset market. LEIs will enhance transparency, compliance, and reporting for financial institutions and regulatory authorities. Starting in December, LEIs will replace the Foreign Investment Registration Certificate (IRC) for smoother operations and increased market transparency.
Alongside this regulation, previously on July 6, 2023, South Korea has also introduced its second phase of crypto regulations. With these comprehensive measures in place, South Korea aims to create a safer and more secure environment for cryptocurrency investors and market participants. The interagency investigation unit and the introduction of crypto-friendly legislation are significant steps toward addressing the rise in illicit activities and ensuring the long-term stability of the virtual asset market.
All of this is happening to reduce the crime rate, as the South Korean Bank also takes steps towards cross-border payments aimed at addressing issues related to high fees, lengthy settlement times, and the lack of tracking features. Several financial institutions, including SCB TechX from Siam Commercial Bank, have participated in the pilot. With this move, exploitation in cross-border payments may be reduced.