South Korea Pushing Deeper Collaboration With Japan, China For Joint Cryptocurrency Regulations
South Korea is pushing for deeper cooperation with Japan and China on regulating the growing cryptocurrency market.
Seoul’s official news agency Yonhap quoted South Korea's Financial Services Commission (FSC) Chairman Choi Jong-ku as saying that vice ministers from the three countries had recently concluded a high-level meeting in the nation’s capital, and exchanged ideas on new cryptocurrency rules.
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Choi said Seoul wants to "set up a detailed system of cooperation" with China and Japan. The official also warned the public against "irrational" trend of investing in cryptocurrencies, and added that a "fever of speculative investment in cryptocurrencies is ongoing."
South Korea’s Regulators Start Inspecting Banks Offering Crypto Exchanges
The announcement by FSC comes simultaneously as the Korea Financial Intelligence Unit (KoFIU) and Financial Supervisory Service (FSS) started to carry out joint inspections on six commercial banks that are offering trading accounts to cryptocurrency exchanges in Korea.
The two regulators said in a joint statement:
“The inspectors will look into whether the banks comply with their anti-money laundering (AML) obligations in their transaction with cryptocurrency exchanges; and whether they have in place appropriate measures to verify their customers’ identification in regard with cryptocurrency trading.”
According to the KoFIU and FSS, cryptocurrencies are highly vulnerable to abuse by criminals to launder money because of the anonymity and non-face-to-face nature of all transactions. They explained that virtual accounts offered by cryptocurrency exchanges make it more difficult for authorities to identify real names of card holders.
Banks are required “to assume greater responsibility as gatekeepers to prevent such illegal activities using cryptocurrencies,” the statement added.
Concerns About Cryptocurrencies
Central banks across Asia have expressed varying concerns on cryptocurrencies.
South Korea’s FSS Governor Choe Heung-sik said in December that he does not recognize cryptocurrencies as substitutes for money and even ruled out regulating its trade. For his part, Japanese Finance Minister Taro Aso dismissed Bitcoin as a credible currency but added he would carefully monitor its progress.
“There’s no fixed definition on whether it’s currency or not. This issue is a difficult one…It has not yet been proven to be credible enough to become a currency, so I need to watch [Bitcoin] for a little while more.”
Meanwhile, Chinese central bank Deputy Governor Pan Gongsheng has predicted the demise of Bitcoin, with its end coming from hackers or global ban from government regulators.