A proposed law change by South Korea’s Financial Services Commission could force local cryptocurrency exchanges to disclose user identities.
According to an official press release from the South Korean FSC, the regulator is proposing new rules for anti-money laundering (AML requirements on virtual assets. The proposal is now up for public consultation for forty days, up until 14 December 2020.
The document outlines its definition of virtual asset service providers (VASP) which engage in the purchase and sale of virtual assets, facilitate exchanges between virtual assets, transfer virtual assets, provide storage and administration of virtual assets as well intermediaries or brokerages of virtual assets.
Crypto and other virtual assets
The South Korean FSC lists common examples of VASPs like ‘virtual asset trading service providers, safekeeping/administration service providers,and digital wallet service providers’.
The document also defines what virtual assets fall under the scope of the proposed laws. It describes virtual assets as ‘digital tokens with economic value that can be digitally traded or transferred’.
Items that are not included in the scope of virtual assets include digital tokens that cannot be exchanged for fiat currencies, commodities or services, prepaid electronic payment methods (e-money), electronically registered stocks and electronic notes. Prepaid cards, mobile gift cards and electronic bonds are not considered virtual assets either.
Real name accounts
A major feature of the proposed rule changes will potentially require virtual asset service providers (VASP) to use real-name accounts for transactions with their users and customers.
Furthermore VASPs will have to open real-name accounts with financial institutions and setup separate accounts for customers deposits. VASPs will also have to obtain a certificate of Information Security Management from Korea Information Security Agency.
Firms must also have no record of fines and penalties in the last five years.
The South Korean FSC intends to enforce the changes by March 2021, which will be subject to the ongoing public consultation.