Regulatory Crackdown on Unregistered Crypto OTC Desks in South Korea over Money Laundering Fears

Regulatory Crackdown on Unregistered Crypto OTC Desks in South Korea over Money Laundering Fears


The Cryptocurrency OTC Market in South Korea Under Regulatory Scrutiny

South Korean authorities are directing their attention towards the unregulated cryptocurrency over-the-counter (OTC) market, as reported on Sunday. OTC trading involves the direct buying and selling of assets, such as stocks, bonds, or digital currencies, between two parties outside of formal exchanges. These trades lack the same disclosure requirements as those on exchanges.

The report outlines the presence of illegal virtual currency OTC corporations that transform 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 outlines that while a prominent South Korean exchange like Upbit lists 192 digital currencies, some OTC corporations offer over 700 varieties, functioning as some kind of “black market.”

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Lack of Specific Regulatory Measures

The report examines 3 individuals who were apprehended for using OTC enterprises to acquire 94 Billion won ($78.96 million) worth of digital currency. 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 enterprises are as of now prohibited from taking part  in virtual currency transactions through OTC corporations under Post 10 of the Specific Financial Information Act. Nonetheless, ordinary investors can only face penalties for unlawful foreign exchange transactions if they violate the Foreign Exchange Transaction Act.

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Hot Take: Regulating the Cryptocurrency OTC Market in South Korea

The focus on regulating the unregulated cryptocurrency OTC market in South Korea outlines the authorities’ concerns regarding undeclared virtual asset trading enterprises. With the presence of OTC corporations offering a wide range of digital currencies, there is a growing need for specific regulatory measures to oversee this sector. The lack of such measures has resulted in probable illicit activities and money laundering. As South Korea continues  to navigate the cryptocurrency landscape, it is critical for regulators to address these matters and establish a framework that ensures transparency and accountability in OTC trading.

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Benito Cormi, the brilliant crypto analyst who has made waves in the world of cryptocurrency. With his razor-sharp analytical skills and deep understanding of the digital asset landscape, Benito has become a trusted figure in the industry and remains at the forefront, tirelessly researching and analyzing market trends to help individuals and businesses make informed decisions in this dynamic landscape.

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