South Korea’s Crypto Sector Takes Proactive Measures: Tax Authority and Exchanges Unite to Prevent Illicit Transactions

In a collaborative effort to curb illegal foreign transactions involving cryptocurrencies, South Korea’s tax authority, the Korea Customs Service group, and five major crypto exchanges, including Bithumb Korea, Coinone, Korbit, and Streami, have formed a committee. The newly established group, orchestrated by the Digital Asset Exchange Association (DAXA), aims to address concerns related to unlawful cryptocurrency exchanges. As South Korea intensifies its regulatory stance, this move comes on the heels of recent measures by the Financial Services Commission (FSC) to combat money laundering in the crypto space.

Background of the Committee Formation:

  • The Korea Customs Service, founded in 1970 under the Ministry of Economy and Finance, along with the tax authority and prominent crypto exchanges, seeks to create a unified front against illegal foreign transactions linked to cryptocurrencies. DAXA, representing leading exchanges like Upbit, Bithumb, Coinone, Korbit, and Gopax, assumes an advisory role in the committee, leveraging its pivotal position as the industry’s primary self-regulating body in South Korea.

Scope of Committee Activities:

  • The committee, as reported by News1.KR, will proactively respond to any actions related to illegal foreign exchange transactions involving cryptocurrencies. Additionally, it plans to explore collaborations with regulators and other organizations within South Korea. The platform will serve as a forum to address concerns and gather opinions about combating illicit foreign transactions.

Regulatory Initiatives in South Korea:

  • The Financial Services Commission recently unveiled plans to tighten controls on the outflow of funds overseas, implementing a ban on using credit cards for cryptocurrency purchases to mitigate money laundering risks. This regulatory fervor underscores the government’s commitment to ensuring the integrity of financial transactions involving digital assets.

DAXA’s Ongoing Efforts:

  • In December, DAXA announced its collaboration with financial regulators to identify and scrutinize “undeclared crypto operators.” This joint initiative demonstrates the industry’s proactive engagement with authorities to uphold regulatory standards and foster a secure crypto environment.

Challenges in the South Korean Crypto Landscape:

  • South Korea, despite its vibrant crypto landscape, has faced challenges, including security breaches. The recent exploit of Orbit Bridge for nearly $82 million has prompted investigations by multiple South Korean agencies. Allegations linking North Korea’s hacking group, ‘Lazarus,’ to the incident have further escalated concerns, prompting intervention by the South Korean National Intelligence Service.

Empowering Security and Compliance: South Korea’s Crypto Coalition Takes a Stand

In an era of evolving crypto landscapes and regulatory scrutiny, South Korea’s decisive move to form a committee, uniting its tax authority, customs service, and leading crypto exchanges, signals a robust commitment to fortifying the integrity of its digital asset space. With an emphasis on preventive measures against illegal transactions, the collaboration underscores the industry’s proactive engagement with regulatory bodies. As the country navigates challenges and investigates recent security breaches, this unified front positions South Korea at the forefront of global efforts to establish a secure and compliant cryptocurrency ecosystem.

Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.

Author: Mehar Nayar

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