Even though South Korea has been a pioneering country when it comes to crypto and blockchain adoption, the regulators are tightening the regulations around the industry. Just last month we reported a story of Financial Action Task Force (FATF) requesting the financial authorities of the member states to regulate cryptocurrency exchanges in the same way that they do for banks.
Now local news outlets are reporting that four crypto exchanges facing stricter regulations as they are planning to renew their banking accounts.
Commercial banks prolonged their account management contracts with the four trading sites without any doubt every six months. Nevertheless, the trend was broken in June when the International Money Laundering Protection Agency (FATF) issued guidelines on cryptographic transactions.
In particular, since the banks are legally liable if money laundering charges are identified, they are starting to place imperious obligations on transaction sites commencing this month. An official from the organization confirms the news saying:
“In order to meet this standard, small- and medium-sized exchanges that lack the necessary funds are likely to disappear from the market.”
A few weeks back FATF said that crypto firms will be subjected to rules to prevent the abuse of digital coins such as Bitcoin for money laundering. The move reflects a growing concern among international law enforcement agencies that cryptocurrencies are being used to launder the proceeds of crime.
The Korean government has high expectations of the DLT sector, the development of which can lead to solving the problems of unemployment and the national budget deficit. But to make it happen, it is necessary to create a regulated legal framework that will provide favorable conditions for blockchain projects.