The South Korean Financial Services Commission (FSC) has notified crypto-currency companies of the need to comply with the FATF “rule of the road” from March 25, 2022. They are required to collect and share information about users who make transactions worth 1 million won (~$817) or more.
“VASP is required to transfer the names of the senders and recipients [of the transaction], as well as the addresses of the virtual assets, to the receiving party. The originating company is also required to provide the sender’s resident registration number within three business days of a request from the receiving party or [regulators],” the notice reads.
Companies are also required to keep the relevant user information for five years from the date of the transaction. In case of violation, disciplinary measures are provided.
The new rule may limit the ability of South Korean traders to conduct crypto transactions. With the exception of the “big four” exchanges – Bithumb, Upbit, Korbit and Coinone – and a few smaller platforms, other players in the sector lack the systems necessary to comply with FSC requirements.
The implemented mechanisms have a significant drawback – require similar principles to be adopted by foreign platforms.
According to The Chosun Ilbo, Upbit users can transfer assets to only eight local platforms, as well as the company’s subsidiaries in Singapore, Indonesia and Thailand.
Bithumb also limited the list of platforms to which customers can send transfers to a number of foreign exchanges like Coinbase, Kraken and Binance. Users can also withdraw assets to non-custodial wallets such as MetaMask. Transfers to local sites are blocked until April 8, 2022.
Recall that the National Assembly of South Korea adopted an amendment to the legislation, which involves the introduction of cryptocurrency taxation from January 1, 2023.
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