South Korean financial regulators plan to bring over-the-counter (OTC) crypto deals under the microscope as concerns increase about the legality of these trades and their connotation to criminal activities. Recent data showed that unlawful foreign exchange transactions totalled about $4bn in 2022.
South Korea to tighten OTC crypto controls
A local report detailed how prominent executives attended a forum on the legal issues and potential criminal dealings associated with digital assets. Among these were Ki No-Seong, the deputy chief prosecutor, and Park Min-woo of the Financial Services Commission (FSC).
This session highlighted money-laundering possibilities and concerns. According to a Google-translated statement, Seong commented:
Illegal virtual currency OTC companies have overseas corporations and are engaged in the business of converting illegally obtained virtual currency into Korean won or foreign currency. There is a need to regulate these companies as undeclared virtual asset trading businesses.
An OTC crypto market is a digital exchange that often escapes government scrutiny. Trades thus include unregulated transactions and peer-to-peer exchanges. Upbit, the largest regulated cryptocurrency platform in South Korea, features about 172 cryptocurrencies, while OTC platforms offer something like 700 cryptocurrencies.
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The stated report alleges that people have used OTC platforms to exchange digital assets for Korean won on several occasions. In the past two years, the International Department of the Incheon District Prosecutor’s Office arrested three people for suspected illegal foreign exchange activities. Because of this and other threats, South Korea commits itself to addressing OTC exchanges and stamping out these unlawful actions.
