In an effort to combat illicit activities in the crypto market and protect investors, South Korea has taken significant steps to strengthen its crypto regulations. Two major developments were reported on July 26.
Establishment of the Joint Investigation Centre for Crypto Crimes
South Korea has formed an interagency investigation unit dedicated to tackling cryptocurrency-related crimes. The new Joint Investigation Centre for Crypto Crimes is led by the Seoul Southern District Prosecutors Office. Further, it comprises 30 investigators from various government agencies and bodies. These include the prosecution, Financial Supervisory Service, National Tax Service, and Korea Customs Service.
According to FNNews, Prosecutor General Lee Won-Seok emphasized the importance of this initiative.
He stated,
“The virtual asset crime syndicate should help the initial virtual asset market not shrink and eliminate risks to stably settle in place.”
Additionally, the unit’s primary focus will be on investigating market players involved in the issuance or distribution of cryptocurrency. This is to identify irregular trading activities and probe associated criminal actions. Moreover, it will expedite the investigative process for crypto-related criminal cases, covering detection, analysis, and handling.
LEI Adoption in the Virtual Asset Market
Simultaneously, the Korea Securities Depository has entered into a business agreement with Code, a company specializing in travel rules, in Seoul to encourage the adoption of Legal Entity Identifier (LEI) in the virtual asset market.
Notably, LEI is a standardized ID given to corporations worldwide participating in financial transactions. It was introduced after the 2008 financial crisis for the efficient management of financial transaction information.
The move further aims to enhance transparency and promote the use of LEIs among virtual asset operators. Additionally, it will facilitate reporting and supervising due diligence for businesses, financial institutions, and regulatory authorities. Notably, it aligns with the EU’s Transfer of Funds Regulation (TFR).
Starting in December, LEI will replace the Foreign Investment Registration Certificate (IRC). Koh Chang-seop, Head of the Securities Settlement Division at Korea Securities Depository confirmed this.
South Korea’s First-of-its-Kind Legislation
Furthermore, the launch of the Joint Investigation Centre for Crypto Crimes coincides with the passing of South Korea’s groundbreaking legislation at the National Assembly.
This legislation aims to safeguard crypto investors by introducing penalties, including prison sentences and fines, for individuals engaged in unfair trading practices concerning virtual assets, the utilization of undisclosed information, market price manipulation, and illicit transactions.
With these significant developments in crypto regulation and crime prevention, South Korea is taking proactive measures to ensure the integrity and safety of its virtual asset market and protect investors from potential risks and fraudulent activities.
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