The Crypto OTC Market in South Korea Under Regulatory Scrutiny
South Korean authorities are directing their attention towards the unregulated crypto over-the-counter (OTC) market, as reported on Sunday. OTC trading involves the direct buying and selling of assets, such as stocks, bonds, or cryptocurrencies, between two parties outside of formal exchanges. These trades lack the same disclosure requirements as those on exchanges.
The report highlights the presence of illegal virtual currency OTC firms that convert illegally obtained virtual currency into Korean won or foreign currency. It emphasizes the need for regulation to address these undeclared virtual asset trading businesses.
Necessity for Regulatory Attention
Deputy Chief Prosecutor Ki No-Seong and Park Min-woo of the Financial Services Commission stress the importance of regulating the unregulated OTC market within the digital currency space. The report reveals that while a prominent South Korean exchange like Upbit lists 192 cryptocurrencies, some OTC firms offer over 700 varieties, functioning as a type of “black market.”
Lack of Specific Regulatory Measures
The report examines three individuals who were apprehended for using OTC enterprises to acquire 94 billion won ($78.96 million) worth of cryptocurrency. These trades were executed at the request of Libyans and converted into cash in South Korea. The report’s author firmly states that South Korea lacks specific regulatory measures to oversee the OTC sector.
Current Regulations and Penalties
According to local reporter Gong Byeong-seon, domestic virtual asset businesses are currently prohibited from participating in virtual currency transactions through OTC firms under Article 10 of the Specific Financial Information Act. However, ordinary investors can only face penalties for unlawful foreign exchange transactions if they violate the Foreign Exchange Transaction Act.
Hot Take: Regulating the Crypto OTC Market in South Korea
The focus on regulating the unregulated crypto OTC market in South Korea highlights the authorities’ concerns regarding undeclared virtual asset trading businesses. With the presence of OTC firms offering a wide range of cryptocurrencies, there is a growing need for specific regulatory measures to oversee this sector. The lack of such measures has resulted in potential illicit activities and money laundering. As South Korea continues to navigate the crypto landscape, it is crucial for regulators to address these issues and establish a framework that ensures transparency and accountability in OTC trading.
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