Korean Government Remains Firm on Crypto KYC Mandate

South Korea has doubled down on its commitment to eliminating the use of cryptocurrency in illicit activities, but played down more serious proposals.

AccessTimeIconFeb 14, 2018 at 9:05 a.m. UTC
Updated Sep 13, 2021 at 7:34 a.m. UTC

South Korea has doubled down on its commitment to eliminate the use of cryptocurrency in illicit financial activities, while expressing a will to foster the country's blockchain development.

In a video published Wednesday, Hong Nam-ki, head of the office for policy coordination, said the government is taking a strong stance in bringing transparency to domestic cryptocurrency exchanges.

Hong's statements follow the government's formal response to a petition opposing a severe clampdown on South Korea's cryptocurrency trading platforms. According to the South Korean president's website, the petition has gathered over 280,000 signatures meaning the government was obliged to provide a formal response.

As reported, South Korea's different governing bodies are voicing contradictory comments on regulating cryptocurrency trading in South Korea – with a ban on exchange-based trading even being proposed in some quarters.

Yet, Hong's video today perhaps indicates that instead of banning cryptocurrency trading, the government is focusing more on a strict implementation of anti-money laundering activities for the time being.

"At the moment, the government places a priority on transparency of virtual currency transactions within the framework of current law. Undesirable things occurred during the check-up process, such as money laundering through an unconfirmed virtual account or, in some cases, depositing customer money in the accounts of employees in the business," Hong said in the video.

The comments are also in line with a new regulation imposed on South Korea's cryptocurrency trading platforms ushered in a ban on anonymous trading accounts. Starting from February this year, all exchanges in South Korea have to implement real-name verification for customers before they can resume trading activity.

Previously, the South Korean customs agency also reported that $600 million in unregistered capital exchange involved the use of cryptocurrency as a medium to bypass the country's capital controls.

While the option of banning cryptocurrency exchanges has not been fully ruled out, Hong explained in the video that South Korea's prime minister had recently indicated that prohibiting the use of cryptocurrency exchange is just one of many possibilities, and the government currently is currently not considering the most serious scenario.

Elsewhere in the government response, Hong also stressed that fostering blockchain development will be one of the primary focuses of the government in the coming year. He said the country has increased the government budget associated with blockchain technology for 2018.

Hong concluded:

"We will do our best to improve technology competitiveness by developing technology for the blockchain or applying to the industry. In particular, as part of this, the government plans to make a 'blockchain industrial development basic plan' during the first half of the year."

Editor's note: Some of the statement have been translated from Korean

Hong Nam-ki image via the South Korean government website


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