Prosecutors and authorities in South Korea are focusing on issues related to unregulated over-the-counter (OTC) trading and deposit businesses that use cryptocurrencies. Officials made the case for stricter regulation of the cryptocurrency industry during the third annual prosecutors' conference, citing worries that these businesses aid in crime and money laundering. According to the Korea Customs Service, illicit cryptocurrency exchanges of 5.6 trillion won ($4 billion) took place in 2022.
Regulatory Attention Turned to Unregulated Crypto OTC Firms in South Korea
According to a regional report released on Sunday, South Korean authorities are concentrating on the cryptocurrency OTC market. Over-the-counter (OTC) trading is essentially the direct exchange of assets like stocks, bonds, or virtual currencies between two persons as opposed to a formal exchange. The same disclosure standards that apply to assets traded on exchanges do not apply to OTC dealings because they take place off-exchange.
"Unlawful virtual money The study states that OTC companies convert unlawfully obtained virtual currency into Korean won or other currencies through their overseas subsidiaries. As unregistered firms engaged in the exchange of virtual assets, these organizations require regulation.
The need for regulatory focus on the unregulated OTC market in the context of digital currencies was stressed by Deputy Chief Prosecutor Ki No-Seong and Park Min-woo of the Financial Services Commission. According to the study, one OTC company offers more than 700 different cryptocurrency variations, in contrast to the well-known South Korean exchange Upbit's 192 cryptocurrency listings. According to the report's author, OTC firms operate like a "black market."
The investigation examines the actions of three people who were caught buying cryptocurrencies valued at 94 billion won ($78.96 million) via OTC companies. The report claims that these transactions took place "at the request of Libyans and were subsequently sent to Korea for conversion into cash." The report's author adamantly maintains that South Korea lacks explicit legislative measures designed to regulate the OTC industry.
According to Article 10 of the Specific Financial Information Act, domestic virtual asset organizations are now prohibited from taking part in virtual currency transactions through OTC firms, according to Local Daily reporter Gong Byeong-seon. The Foreign Exchange Transaction Act must be broken in order for regular investors to be subject to penalties for illegal foreign exchange operations.
What do you think of South Korea emphasizing OTC trading desks for cryptocurrencies? Post your ideas and viewpoints on this topic in the comments area below.