Amendment to Special Bill on Cryptocurrency Approved in South Korea

From Seoul this evening, the Amendment Subcommittee on Parliamentary Affairs from National Assembly today officially revised the amendment to the Act on Reporting and Use of Specific Financial Information submitted by the Financial Services Commission. If passed as law, the Act would directly affect what and how any company handling and trading cryptocurrencies must report to the Financial Services Commission.

The amendment aims to ensure that domestic cryptocurrency virtual assets-handling companies comply with anti-money laundering obligations in line with the recommendations of the International Anti-Money Laundering Organization (FATF).

Representatives from Korea’s Democratic Party Yoonkyung Joon, Jaesoo Jun, Byungwook Kim, and Barun Future Party’s Soomin Kim discussed, in private meetings, loosening some reporting requirements. The loosened requirements include the mandatory certification of information security management system (ISMS) and issuance of real name verification deposit and withdrawal accounts (real name accounts). 

It was the real-name bank accounts which brought crypto trading on exchanges to a sudden stand-still in January 2018.

The real-name bank accounts stipulation has been criticized for being a superfluous clause, in particular because banks have been in charge of issuing new accounts due to the uncertainty of the government. The clause pertaining to the real-name accounts for cryptocurrency exchanges also depends on arbitrary interpretation of the Financial Services Commission’s recommendations.

The approved amendment has been a hot-topic at National Assembly as early as when the new Financial Services Commissioner took over at the FSC. Commissioner Sungsoo Eun expressed interest in seeing the amendment be approved, and more interest in the Act itself being passed.

The Korea Blockchain Association is also backing the Act and the recent amendment. It seems that there is a good deal of support for the Act since it would likely ease barriers to entry for companies and individuals to enter the crypto markets while also being protected from many of the risks common in the markets these days.