South Korea to prohibit crypto exchange executives from trading on own platforms

The Financial Services Commission of South Korea recently imposed restrictions that would prevent executive employees and exchange operators to trade on their own platforms.

According to local news outlet Yonhap News Agency, the Financial Intelligence Unit of the commission met with officials of different crypto exchanges in the country and presented the plan to modify the Act on Reporting and Use of Certain Financial Transaction Information.

As the intermediary between financial institutions and law enforcement agencies in South Korea, the Financial Intelligence Unit serves as the main organization responsible for Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) policy formulation and implementation.

Key changes in relevant laws

In March last year, South Korea’s Act on Reporting and Use of Certain Financial Transaction Information was amended to recognize cryptocurrencies as virtual assets, effectively adding anti-money laundering responsibilities related to crypto services.

The legal basis for all cryptocurrency exchanges operating in the country was provided by the amendment and made it mandatory for all crypto services to report to the Financial Intelligence Unit.

The latest modification to this law inhibits cross-trading on exchanges in South Korea in an attempt by the financial regulatory body to eliminate price manipulation. Failure to comply with this will result in a hefty penalty of up to 100 million Korean Won ($89,656) and will be imposed in the form of license cancellations.

Commission-free trading possible

Also part of the amendment recently made was the obligation of crypto exchanges to hold at least 70% of customer deposits in cold wallets.

With this, exchanges will have no choice but to convert fees charged on crypto trades that are typically collected in cryptocurrencies to be converted into Korean Won on their platform. This could mean compulsory commission-free trading.

Meanwhile, as expected, crypto exchange representatives weren’t happy with the development and argued against the ban, saying it will heavily disrupt their revenue flows.

 

Image courtesy of Cointelegraph News/YouTube

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