By
Bena Ilyas
April 17th, 2024
Exchanges have been fined for compromising customer data and privacy, and have been asked to resolve the issue in due time.
In order to curb the speculation surrounding cryptocurrencies, the government of South Korea is seen flexing its muscles to bring several regulatory measures in place. With the government announcing new regulatory measures and policies, cryptocurrency exchanges operating in the country are having a tough time.
In yet another crackdown on the domestic cryptocurrency exchanges, the South Korean government has recently slapped fine worth 141 million won ($130,000) for violating/sacrificing user privacy and providing insufficient protection of user data. On Wednesday, January 24, the Korean Communications Commission (KCC) has imposed exchanges on eight major cryptocurrency exchanges sighting reasons like storing of customer’s data outside South Korean and not deleting data of previous customers.
The eight crypto exchanges include Kotbit, Coinone, Ripple4y, Upbit, Coinpia, Coinplug, Youbit, and Eyalabs. As reported by the agency, the individual fines for each of these exchanges range in between $9000 to $14000.
In a statement, KCC chairperson Lee Hyo-Sung said: “While the security threats such as virtual currency speculation and hacking of [cryptocurrency] handling sites are increasing, the actual situation of personal information protection of major virtual currency exchanges is very weak. Therefore, we will try to reduce the damage of users through more strict sanctions.”
The KCC has further asked all of these exchanges to resolve the matter regarding privacy issues within 30 days and file the report to the agency. The regulator also states that it would be implementing necessary plans to look after managing cryptocurrency wallets, private keys, and transactions in the form of administrative guidance to exchanges.
In another set of regulatory measures on the exchanges, the South Korean government has now imposed Income Tax on the yearly reported earnings. As a “measure of tax enforcement,” the government has decided to collect 24.2% corporate and local income tax from exchanges this year. An official from the Ministry of Strategy and Finance said that cryptocurrency exchanges are required to pay 2.2 percent local tax on income earned last year by end of April and 22 percent corporate tax on income earned by end of March.
It looks like several regulatory measures brought by the Korean government are likely to take away the heat from the country’s cryptocurrency market. In addition to this announcement, the Financial Services Commission (FSC) in South Korea has also set a deadline of Jan 30 to link their crypto accounts with real names to their individual bank accounts. This move is aimed at strengthening “know-your-customer” (KYC) compliance and post the deadline, investors, who fail to link their accounts, most likely won’t be allowed to trade in the crypto markets.
Apart from setting up the deadline, the announcement from FSC also issues anti-money laundering guidelines to crypto exchanges. The guidelines ask crypto exchanges to stay alert against the possibility of any sort of illicit activities. The official statement reads: “Specifically, for users to make virtual currency transactions more than 10 million won per day or more than 20 million won for 7 days when depositing and withdrawing funds, this is the type of financial transaction you suspect for money laundering.”
It remains to be seen as to which more regulations the South Korean government is planning to introduce in the near future.