South Korea Crypto Regulation: FSC Mulls Freezing Suspect Accounts
The Financial Services Commission (FSC) of South Korea is reportedly tightening its grip on the cryptocurrency market by introducing stricter crypto regulation. As part of their broader initiatives to tackle growing crypto crimes and threats, the watchdog is considering a proactive measure to freeze suspicious accounts.
The latest report suggests that the country is exploring the introduction of a payment suspension system that would block transactions before suspects can launder potentially illicit gains, mirroring tools already used in South Korean stock markets.
With this strategic development, South Korea is expressing its commitment to protecting investors from crypto-related crimes, including price manipulation. The move is poised to have significant implications on the country’s financial ecosystem as well as the global crypto space.
Analyzing South Korea’s Crypto Regulation Push
According to local reports on South Korean crypto regulation, the country’s financial watchdog, FSC, is planning to implement a payment suspension system to block suspicious crypto transactions. This measure is expected to tackle the growing issues connected with crypto price manipulation spam.
If approved, this crypto regulation move could bring a notable change in the country’s digital asset industry, ensuring more transparency and security. This system would grant authorities the power to restrict transactions suspected of being linked to price manipulation, effectively preventing suspects from making illicit profits.
While the nation’s first phase of crypto regulation prioritised user protection, the second phase is expected to launch a more comprehensive framework, encompassing stablecoin laws and enhanced measures to combat market abuse, pending formal proposal announcements.
Extending Rules from Stocks to Crypto
Notably, this crypto regulation will bring the cryptocurrency market in line with the country’s existing stock market rules, which already empower authorities to freeze accounts suspected of manipulation before any profits can be realized.
The existing crypto regulation in South Korea does not allow the authority to swiftly freeze suspect price manipulation accounts. This makes it easier for illicit actors to hide their tracks and launder millions and billions in profits through market manipulation.
The FSC highlighted that manipulative practices like front-running, wash trading, and spoofing can yield substantial unrealized profits that can vanish quickly. To combat this, the market watchdog advocates for new crypto regulation that mirrors stock legislation, empowering authorities with the necessary tools to respond effectively and immediately to such illegal activities.
Will South Korea Combat Growing Threats?
Interestingly, South Korea has been taking increasing efforts to strengthen its oversight on the crypto industry. The latest proposal is part of a broader trend, where authorities are applying conventional financial rules to the crypto space.
For instance, the National Tax Service (NTS) recently asserted its authority to access crypto assets stored in cold wallets, warning that these assets are not beyond its reach in tax evasion cases. The NTS emphasised its power to conduct home searches and seize offline storage devices, underscoring its commitment to enforcing tax compliance.
Meanwhile, the FSC has also been exploring ways to hold crypto exchanges to higher standards, including imposing bank-like liability for user losses resulting from hacks or system failures, even in cases where no negligence is proven. These developments demonstrate the country’s growing efforts to integrate the digital asset industry into the traditional financial regulatory framework. With this, they are trying to ensure a more cohesive and robust crypto regulation to tackle growing threats.
