Restructuring of Cryptocurrency Exchanges Around the Corner

The Legislation and Judiciary Committee of the National Assembly passed an amendment to the Act on Report on and the Use of Specific Financial Transaction Information on March 4. If the National Assembly adopts the amendment on March 5, every virtual asset service provider such as cryptocurrency exchanges must report its business based on its real-name account provided by a bank.

The amendment is to prevent virtual asset-based money laundering in accordance with the Financial Action Task Force’s advice. According to the amendment, such real-name accounts will be opened under stricter conditions and requirements, and then cryptocurrency exchanges without real-name accounts are likely to be driven out of the market.

At present, only four cryptocurrency exchanges (Upbit, Bithumb, Coinone and Cobit) have real-name accounts in South Korea. Once the amendment takes effect, every virtual asset service provider failing to report its business with a real-name account will be subject to a fine of up to 50 million won or up to five years in prison.

If the National Assembly adopts the amendment on March 5, it will be made public immediately and become effective one year after the promulgation. Every virtual asset service provider established before the implementation of the amendment must file a business report within six months from the date of implementation.