On November 3, the National Financial Services Commission of South Korea announced that it will introduce a legislative amendment to the local regulation law in order to ensure that citizens are protected from illicit activities, such as the money laundering of virtual assets.
Moreover, the Commission will be specifically bringing changes into the regulation of the so-called “dark coins”, privacy-oriented currencies, which’s transaction records are specifically designed to be untraceable. This will ensure that all activity connected to cryptocurrency transfers can be overseen for potential threats to users.
“The amendment to the enforcement ordinance stipulates the scope of virtual asset business operators and virtual assets, reporting documents and procedures, standards for opening a real name verification deposit and withdrawal account, and targets and standards for information provision when transferring virtual assets,” the officials stated.
The new changes will mainly affect business entities, whose activities are connected to the buying, selling, exchanging, transferring, storing, and managing of cryptocurrencies. All such brokerages and mediation companies must now first get approval from the financial department of South Korea before continuing to operate.
Along with restricting certain blockchain operators in the country, entities that register as cryptocurrency providers will have to provide sufficient KYC information and report their operations within six months of the law’s implementation. This is said to mostly affect privacy coin ecosystems such as Zcash, Monero, and Dash.
As per the updated Special Payments Act, blockchain companies will have to introduce the required compliance policies and updates to their technology before reinstating operations in the country. Regulations will only be applied to transferring virtual assets equivalent to 1 million KRW (around $880) or more, with transactions not falling under the legal scope when conducted between individuals.
According to the announcement, the Commission will wait for a year before fully imposing the new regulation laws, which are expected to go into effect in March 2021.