Although South Korea is one of the main crypto exchange markets with exchanges holding about $1.9 billion worth of virtual currencies, there were no relevant regulations to this day. After years of deliberations, the country has finally specified the legal framework for cryptocurrency.

The National Assembly of South Korea has passed a bill establishing a legal foundation for virtual currencies. This is a big step toward the legitimacy of cryptocurrency in South Korea.

So far virtual currency exchanges were classified as information providers so they didn’t fall under the jurisdiction of the financial regulator. The new bill categorizes cryptocurrency as digital assets which makes crypto exchanges recognized as regulated financial business.

The legal framework will require exchanges to enhance their security systems. Crypto exchanges and service providers to report and register with the South Korean financial regulator and the Financial Services Commission (FSC). The crypto trading platforms that are already operating will be obliged to the Financial Intelligence Unit (FIU).

Taking into account the Financial Action Task Force (FATF) recommendations, the crypto exchanges will have to comply with strict KYC and AML regulations as well as the processes relating to the customer verification.

South Korea has been criticized for the lack of preventive measures when it comes to hacking damages. To that end, the Financial Supervisory Service widened the scope of its accounting practices by including the virtual currency exchange platforms. As explained by the Korean top financial regulator, the present legal measures will lead to the transparency and fulfillment of international standards.

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