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- South Korean regulatory authorities have unveiled intent to increase scrutiny on over-the-counter cryptocurrency transactions.
- The crypto held abroad accounts for about 70% of all assets outside the country.
South Koreans’ Overseas Crypto Assets Boom to $99B
On Wednesday, the National Tax Service of South Korea revealed that South Koreans possess virtual assets valued at 131 trillion won (approximately $99 billion) in foreign accounts.
This amount constitutes 70% of the total declared foreign assets.
According to the tax agency’s data, 1,432 entities, comprising individuals and businesses, declared holding overseas cryptocurrency accounts.
To put this in perspective, South Korea has a populace nearing 52 million, based on figures from the World Bank.
This year, South Korea enforced a compulsory declaration rule, as reported by Yonhap News.
As per this regulation, Korean citizens must disclose by June if they maintain accounts overseas containing more than 500 million won.
Internationally, nations are delving into strategies to tax digital assets. By 2025, South Korea anticipates implementing taxes on cryptocurrency gains.
Additionally, the country is considering imposing taxes on airdropped cryptocurrencies.
South Korea Shifts Regulatory Focus to OTC Crypto Transactions
Due to increasing apprehensions regarding the illicit use of digital currencies, such as money laundering, South Korean regulators have declared their intention to intensify their scrutiny of over-the-counter (OTC) crypto trades.
As a result, the authorities are implementing measures to monitor OTC crypto trading activities in the nation more closely.
As a regional news outlet relays, the official announcement came during a “Criminal Legal Issues Related to Virtual Assets” session at the ‘2023 3rd Supreme Prosecutors’ Office Criminal Law Academy’.
At this gathering, Deputy Chief Prosecutor Ki No-Seong from the Financial Services Commission emphasized the pressing need for stringent regulations around OTC cryptocurrency dealings.
“Illegal virtual currency OTC firms operate with foreign entities and are involved in converting unlawfully acquired digital currencies into either Korean won or other foreign currencies.”Deputy Chief Prosecutor Ki No-Seong
Highlighting the severity of the issue, the authorities pointed to an instance from 2022 when three people were detained in South Korea. They were detained for illicitly purchasing cryptocurrencies valued at 94 billion Won (approximately $70.9 million) through OTC channels.
South Korea Enacts First Comprehensive Crypto Law Amid Recent Controversies
After witnessing a series of digital asset controversies, including the collapse of tokens from Do Kwon, which intensified a $2 trillion crypto-market downturn, South Korea has formally enacted its maiden comprehensive cryptocurrency legislation.
The parliament ratified the Virtual Asset User Protection law. This consolidates 19 crypto-focused bills in July 2023 following an extended deliberation period.
Empowering the Financial Services Commission, this act grants them authority over cryptocurrency providers and asset guardians.
Moreover, the Bank of Korea can now inspect such platforms.
The law mandates adequate insurance, reserve funding, and record maintenance.
It encompasses assets like Bitcoin, with conventional capital-market regulations about tokens regarded as securities.