South Korea: Crypto-bank decries lack of ‘clear authoritative interpretation’

The Special Provisions Act is set to come into effect from 25 September in South Korea and this has left many exchanges panicking. Popular crypto-banking platform Sandbank is one of them, with the firm recently revealing the blurry regulatory picture currently taking shape.

According to reports, the requirements for registrations have been difficult to meet for small exchanges. In fact, Upbit has been the only exchange to meet these requirements. A part of the “The Big Four” in South Korea alongside Bithumb, Coinone, and Korbit, UpBit has already submitted a business report with the Korean Financial Intelligence Unit [FIU].

Lack of clarity is uniform

Crypto-trading platforms that fail to register their businesses as digital asset service providers before the deadline passes will face an outright ban. However, as noted by Sandbank, “there is no clear authoritative interpretation from the relevant agencies. It is still unclear whether Sandbank is a virtual asset operator.”

As it turns out, this s a common problem among local companies offering deposit/loan services.

As far as its next steps are concerned, Sandbank noted,

“Sandbank is preparing to acquire the Information Management System Certification (ISMS) certification, and is currently awaiting evaluation after applying for certification. ISMS certification is the first condition among virtual asset business registration requirements.”

Meanwhile, confusion among the masses, along with crypto-businesses, continues to mount. Especially when officials of the regulatory body are passing on mixed messages.

“Mixed messages”

As per local reports, the Financial Service Commission’s (FSC) Chief Nominee Koh Seung-Beom on Wednesday “rejected” cryptocurrencies as a financial asset. However, a day later, the agency announced establishing an independent bureau to further strengthen the supervision of virtual assets, operators. It will also closely detect possible money laundering.

FSC’s arm responsible for anti-money laundering actions, Korea Financial Intelligence Unit [KFIU], will take charge of the newly-formed bureau. The report added,

“The “crypto asset monitoring bureau” will be assigned to monitor any suspicious financial activity on cryptocurrency assets, to decide the extension of license for cryptocurrency operators and to explore ways on how to enhance investor protection rules.”

KIFU will also home a Policy Management Planning Division which is yet to be launched. The FSC official stated,

“The FSC’s decision for the creation of an independent bureau inside KFIU with increased personnel is aimed at checking and monitoring cryptocurrency-related financial activity and preventing potential money laundering.”

Regulatory efforts with no clarity remain a problem in South Korea. As the registration deadline inches closer, exchanges are trying to find a Plan B since regulators are paying no heed to their woes.