South Korea plans interagency crackdown on illegal crypto transactions

Several South Korean financial authorities are planning to join forces to combat illegal operations involving cryptocurrencies like Bitcoin (BTC).

The interagency crackdown comes in response to growing concerns over speculative investments and potentially illegal activities amid the ongoing boom in crypto markets, Koo Yun-cheol, head of the Office for Government Policy Coordination, said Monday.

“There is a need to pay special attention to the occurrence of illegal activities using virtual assets,” he stated at a vice ministers’ meeting on crypto, according to local news agency Yonhap.

As part of the crackdown  — which is slated to continue until June — the Financial Services Commission will require local financial institutions to strengthen the monitoring of withdrawals of cryptocurrencies. Any suspicious activity should be reported to the state-run Financial Intelligence Unit, an agency responsible for investigating financial crimes. 

Other regulators like the finance ministry and the Financial Supervisory Service also plan to keep an eye on cross-border crypto transactions, the report notes.

South Korea has been facing strict regulation after officially imposing the Act on Reporting and Using Specified Financial Transaction Information in late March 2021. According to the law, local crypto exchanges must maintain relationships with local banks to ensure mandatory real-name account trading. The National Tax Service of South Korea has been increasing its efforts to combat tax evasion involving crypto, as reported in March.

New regulatory developments in South Korea come amid new historic highs on crypto markets last week, with Bitcoin breaking above $64,000 on April 14. Despite the record crypto prices, Bank of Korea Governor Lee Ju-yeol argued that cryptocurrencies have “considerable limitations” as a method of payment, warning that their volatile price fluctuations pose a threat to financial stability.