South Korean Authorities Take Aim at Unregulated Crypto OTC Desks Amid Money Laundering Concerns

South Korean Authorities Take Aim at Unregulated Crypto OTC Desks Amid Money Laundering Concerns

South Korean prosecutors and regulators are directing their consideration towards reported points regarding unregulated cryptocurrency-based over-the-counter (OTC) buying and selling and deposit enterprises. During the third annual prosecutors’ convention, officers proposed the need for enhanced regulation within the crypto sphere, citing issues that these enterprises facilitate cash laundering and fraud. The Korea Customs Service estimates that illegal cryptocurrency exchanges totaling 5.6 trillion gained ($4 billion) transpired in 2022.

Unregulated Crypto OTC Firms in South Korea Draw Regulatory Focus

South Korean authorities are setting their concentrate on the crypto OTC market, in keeping with a regional report printed on Sunday. Essentially, over-the-counter (OTC) buying and selling entails the direct shopping for and promoting of belongings, corresponding to shares, bonds, or cryptocurrencies, between two events moderately than on a proper change. OTC trades happen off-exchange and don’t entail the identical disclosure necessities as belongings traded on exchanges.

“Illegal virtual currency OTC companies have overseas corporations and are engaged in the business of converting illegally obtained virtual currency into Korean won or foreign currency,” the report notes. “There is a need to regulate these companies as undeclared virtual asset trading businesses.”

Deputy Chief Prosecutor Ki No-Seong and Park Min-woo of the Financial Services Commission emphasised the need for regulatory consideration on the unregulated OTC market inside the realm of digital currencies. The report highlights that, whereas the outstanding South Korean change Upbit lists 192 cryptocurrencies, one OTC enterprise gives greater than 700 cryptocurrency varieties. The report’s writer contends that OTC companies perform as a kind of “black market.”

The report delves into the actions of three people who had been apprehended whereas using OTC enterprises and purchased 94 billion gained ($78.96 million) price of cryptocurrency. According to the report, these trades had been executed “at the request of Libyans and subsequently sent to Korea for conversion into cash.” The writer of the report firmly asserts that South Korea lacks particular regulatory measures tailor-made to supervise the OTC sector.

Local Daily reporter Gong Byeong-seon reveals that, presently, home digital asset companies are barred from taking part in digital foreign money transactions by OTC companies in accordance with Article 10 of the Specific Financial Information Act. It is necessary to notice, nevertheless, that odd traders can solely face penalties for illegal international change transactions in the event that they violate the Foreign Exchange Transaction Act.

What do you concentrate on South Korea specializing in crypto-focused OTC buying and selling desks? Share your ideas and opinions about this topic within the feedback part under.

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