Regulatory Spotlight on Over-the-Counter Crypto Market in South Korea

Regulatory Spotlight on Over-the-Counter Crypto Market in South Korea

South Korean Regulators Monitor OTC Cryptocurrency Trading to Prevent Criminal Use

South Korean regulators are closely monitoring the trading activities in the over-the-counter (OTC) cryptocurrency market to prevent its probability criminal use. The South Korean Supreme Prosecutors’ Office Criminal Law Academy recently conducted a session to discuss the challenges and issues associated with virtual currencies, particularly in light of the increasing number of crimes involving fraud and money laundering.

The concerns raised during the session focused on OTC trading and virtual currency deposit enterprises, which often operate outside standard oversight and provide opportunities for illegal activities. Deputy Chief Prosecutor Ki No-seong drew attention to illegal OTC corporations that transform illicitly acquired virtual currency into foreign currency or Korean won, functioning as a “black market” for cryptocurrency trading. These platforms are frequently exploited for money laundering and hiding criminal profits.

The forthcoming Virtual Asset Act, set to be implemented in July next year, intends to address these concerns by enforcing stricter regulations on virtual asset operators.

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Understanding OTC Trading in Crypto

Over-the-counter (OTC) trading refers to direct trading between two parties without involving an exchange. In the context of digital currencies, OTC trading allows investors to sustain privacy and confidentiality in their transactions. In contrast to  regulated exchanges, OTC transactions occur without oversight, making them susceptible to misuse.

In the digital currency market, OTC trading has evolved increasingly trending between institutional investors. Nonetheless, concerns about unregulated environments have deterred numerous traders from taking part . To address this issue, some corporations have introduced fully regulated OTC desks to provide a secure and compliant trading environment for institutional investors.

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Hot Take: Stricter Regulations Needed for OTC Cryptocurrency Trading

The monitoring of over-the-counter (OTC) cryptocurrency trading by South Korean regulators reflects growing concerns about probable criminal activities and the misuse of virtual currencies. OTC platforms, operating outside standard oversight, have been exploited for money laundering and hiding illicitly acquired virtual currency. The lack of transparency in the virtual currency deposit business further exacerbates these risks.

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The forthcoming Virtual Asset Act intends to address these concerns by enforcing tighter regulations on virtual asset operators. By holding a substantial amount of the same digital currency entrusted by their users, these operators will be required to operate with greater transparency and accountability.

To secure the integrity and security of the cryptocurrency market, it is important to establish robust regulatory frameworks for OTC trading and virtual currency deposit enterprises. These measures will assist prevent illegal activities and protect investors from probable fraud and financial losses.

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