South Koreas FIU (Financial Intelligence Unit), operating under the Financial Services Commission, has taken significant steps in reforming the reporting standards for cryptocurrency exchanges, according to Newsis.
South Koreas FIU Enhances Crypto Exchange Reporting Reform
This initiative aims to enhance oversight and ensure that major shareholders meet the qualifications required to operate financial institutions.
The focus of the FIUs efforts lies in reviewing the eligibility of major shareholders in crypto exchanges, mirroring the scrutiny applied in the banking sector. This move follows concerns arising from ongoing criminal lawsuits involving major shareholders of domestic exchanges, including Bithumb.
Under the provisions of the Enforcement Decree of the Specific Financial Information Act, virtual asset business operators, including exchanges, must submit renewal reports every three years after their initial report. This process commenced with Upbits report acceptance in October 2021, with exchanges set to continue renewing reports starting in October 2024.
New Regulations to Bolster Oversight of South Korean Crypto Exchanges
The rationale behind these reforms is to address the regulatory blind spot associated with major shareholders of exchanges. Presently, the Special Financial Services Act mandates that only exchange representatives and registered executives must report and undergo reviews, leaving the actual owners and controllers of exchanges unchecked.
The FIUs objective is to preemptively curb illegal activities by major shareholders, thereby safeguarding the cryptocurrency trading sector and protecting users from potential harm. This standardized approach will influence the future operations of established exchanges like Upbit, Bithumb, and Coinone, helping to maintain integrity and security within the cryptocurrency industry.