By Shelly Melancon (Switzerland)
Banks in South Korea are set to be absolved of any responsibility that may result from crypto-related scams following the legislation compelling crypto exchanges to issue accounts with the real names of their users. The Revised Special Funds Act, which came into operation in March, imposes this obligation on crypto exchanges. In view of this, they have to collaborate with financial institutions to keep up with the said statutory provision.
South Korean financial institutions have expressed their concerns at being held culpable or responsible for fraudulent crypto transactions following the new provision. So far, only a few banks in the country have been able to set up partnerships with these exchanges. To address their reasonable concerns, financial regulators are reportedly coming up with guidelines to protect these banks against claims of money laundering and other illegal activities based using cryptocurrencies. The guidelines provide that government officials could issue a ‘no action’ notice protecting the banks from lawsuits bordering fraudulent crypto transactions.
The new guidelines have come at a time when South Korea’s Financial Service Commission is upping its ante on regulating crypto-related activities. FSC believes real-name accounts would enable easy monitoring of users on exchanges as most of them usually identify users’ accounts by their phone numbers or email addresses, or better still a unique user identification number on each account.
Also read:‘Real-Name Accounts’ Provisions Issued in 2018, Compliance Low
Although the ‘real-name accounts provision’ was issued in January 2018, however, only a few people with crypto accounts complied with the directive, making their accounts real-name based. Late August, banks had threatened to limit the deposit and withdrawal services offered to users who failed to convert their accounts. Meanwhile, back in April, FSC’s Chairman, Eun Sung-soo had issued the 200 exchanges in the country that if they refused to effect the order, they would be required to shut down operations. The Chairman ended his warning with an ultimatum which will expire by September.
Earlier this month, South Korean financial regulators had clamped down on tax defaulters, seizing over $25 million of cryptocurrencies around the world. According to reports, a few defaulters had reached out to the regulators imploring them not to trade off the cryptocurrencies. Some had also gone ahead to offset their outstanding tax payments to retrieve their crypto. Interestingly, South Korea is also looking to impose a tax rate of 20% on all crypto transactions by 2022.
UK and Canada Float Harsher Crypto Regulations
Crypto regulations are lately on the increase in most countries like the UK, Canada, US. In fact, most exchanges are closing operations in some of these countries in light of stringent regulations. Binance has recently had to close its operations in the UK, barring users in the country from accessing its trading services and investment offerings. The popular exchange also announced operations shutdown in the Ontario region of Canada on June 27 as regulations by the Ontario Securities Commission have stifled its activities. With all these bearish events emerging, the future of the crypto market looks hazy.
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