South Korea Increases Regulatory Scrutiny on OTC Crypto Trading
In response to a rise in illicit activities associated with over-the-counter (OTC) crypto trading, South Korea is intensifying its regulatory efforts. Financial regulators in the country are actively investigating the unregulated OTC crypto trading market. The urgency to establish concrete regulatory measures stems from concerns about money laundering and other illegal activities.
Pressure Mounts on OTC Crypto Exchanges
In a discussion titled “Criminal Legal Issues Related to Virtual Assets,” regulatory authorities in South Korea highlighted the potential dangers of the unregulated OTC crypto sector. Key figures emphasized the need to regulate alleged illicit OTC crypto entities that operate without official registration and circumvent established trading norms in the country.
The OTC crypto market, unlike government-recognized exchanges, operates in the shadows and offers a broader range of digital currencies. These platforms allow users to transact outside the purview of established regulations.
Cases Triggering Calls for Stricter Regulation
Illicit transactions through OTC platforms have attracted attention. One notable case involved three individuals apprehended for engaging in unauthorized foreign exchange operations worth $70.9 million. They acquired digital currency from foreign OTC platforms on behalf of Libyan clients and liquidated it within Korean borders.
The Korea Customs Service estimated that unlawful foreign exchange transactions via digital currency amounted to $4 billion in 2022. The total value implicated in financial misdeeds surged from $2.5 billion in 2021 to $6.2 billion the following year, with nearly 70% involving crypto transactions.
These operations aimed to buy overseas digital assets for later domestic sale, capitalizing on South Korea’s regulatory environment and elevated prices for foreign cryptocurrencies.
Hot Take: South Korea Tightens Control Over OTC Crypto Trading
South Korea is stepping up its regulatory efforts to address the surge in illicit activities associated with over-the-counter (OTC) crypto trading. Financial authorities are concerned about money laundering and other illegal endeavors in this largely unregulated market. The OTC crypto sector operates without official registration and evades established trading norms, creating potential risks.
Recent cases of unauthorized foreign exchange operations and the significant increase in illicit financial activity involving crypto transactions have highlighted the need for stricter regulation. South Korea aims to establish concrete regulatory measures to combat these issues and protect investors.
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