Regulators in South Korea are poised to enforce new measures on banks and their dealings with cryptocurrency exchange operators, in the latest wave of tightening restrictions in the country.
The new rules, which have been published by financial regulator Financial Services Commission (FSC), will impact on some 60 unauthorized exchanges in the country, as well as forcing banks to regard digital currency exchanges as “high risk” clients in their dealings with the sector.
Local press reports are suggesting the measures are being brought forward to strengthen transaction monitoring in the sector, as well as encouraging exchanges to adhere to the full scope of user ID requirements.
To date, only four large exchanges in South Korea have created real-name accounts, which have subsequently been cleared by banks. According to the Financial Services Commission, the impetus for tighter regulations is coming from customer demand, with consumers looking to secure more protection for assets held on other exchanges in the country.
Exchanges are already under pressure in South Korea, with a deadline approaching in September for applications for a new operating license—soon to be an essential requirement for any exchange that wishes to continue operating in the country.
Regulators are then set to review trading activity at exchanges for a period of months before deciding whether to grant the license, which will focus on preventing the use of fake or pseudonymous accounts in transacting through their platforms.
Banks will also be expected to take a tougher line on ID verification and other compliance checks, with an obligation to report any activity deemed suspicious to the authorities.
The measures come as part of a wider tightening of restrictions on the sector in South Korea, one of the region’s most significant digital currency markets.
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