The South Korean government is actively supporting virtual asset operators in the country. Recently, the nation’s Financial Intelligence Unit (FIU) held a meeting with five local virtual asset service providers to enhance their “compliance capabilities.” This move is part of a comprehensive strategy after the establishment of an interagency investigation unit dedicated to tackling crypto-related crimes.

On July 27, 2023, the Korea Finance Intelligence Unit conducted an advisory meeting with a crucial focus on strengthening response measures against illegal activities involving virtual assets. This meeting involved a group of five domestic virtual asset operators—Upbit, Bithumb, Coinone, Conit, and Gopax—alongside prosecutors from the recently formed joint investigation unit for crypto crimes.

According to a press statement released by the Financial Services Commission, the primary objective of this meeting was to reinforce the compliance capabilities of virtual asset operators, thus effectively addressing virtual asset crimes.

During the meeting, Director Lee Yoon-soo of the Korea Financial Intelligence Unit highlighted the growing necessity to safeguard investors and establish market transaction integrity. Director Lee emphasized that through its Virtual Asset Strategy Analysis Team, the FIU will enhance the evaluation of financial information related to crypto crimes and expedite reporting these findings to relevant law enforcement agencies.

Additionally, Director Lee acknowledged the indispensable role played by virtual asset service providers in combatting crypto-related offenses and expressed a desire to cultivate a collaborative relationship with them. He stated:

“As virtual asset operators serve as crucial gateways in preventing illegal activities, we intend to fortify the legal compliance incentive system while improving the predictability of laws and systems. This support aims to help operators enhance their autonomous compliance capabilities.”

During the meeting, the five attending virtual asset operators provided insights into their existing frameworks and manpower dedicated to handling crypto crimes. Notably, prominent South Korean crypto exchange Upbit disclosed its utilization of artificial intelligence technology for identifying and mitigating faulty transactions.

Joint Investigation Unit Formed to Counter Crypto Crimes in South Korea

On Wednesday, July 26, the South Korean authorities launched the Joint Investigation Centre for Crypto Crimes to address the escalating rise of crypto offenses in the country.

Comprised of 30 investigators from seven government bodies, including the prosecution, the Financial Supervisory Service, the National Tax Service, and Korea Customs Service, this multi-agency unit will primarily focus on safeguarding investor interests. This proactive measure is necessary as South Korea’s crypto landscape undergoes continuous regulatory evolution.

In a statement, the Prosecutor’s Office stressed the significance of protecting participants in the crypto market. Despite virtual assets being traded daily with a volume exceeding 3 trillion won (~$2.35 million) and involving over 6 million participants, the laws and systems are still incomplete, leaving market participants without adequate legal protection.

The investigation unit will specifically target highly volatile and potentially delisted crypto assets. Additionally, it will crack down on criminal activities like illegal trading practices, tax evasion, unauthorized foreign exchange transfers, and money laundering.

South Korea’s commitment to enhancing compliance capabilities among virtual asset operators is a positive step in the ongoing fight against crypto-related crimes. By fostering strong collaboration between regulatory bodies and virtual asset service providers, the government aims to protect investors while promoting a transparent and secure market environment. The establishment of a joint investigation unit further signifies South Korea’s determination to address the challenges and risks associated with the evolving crypto landscape.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The NFT and cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.