South Korean crypto exchanges with “real-name” bank accounts must hold $2.3 million in reserve funds according to new mandates to improve customer protection.
Starting in September, South Korean cryptocurrency exchanges must comply with a new mandate that states they must reserve a minimum of three billion won ($2.3 million) to safeguard consumers.
Exchanges With “Real-Name” Bank Accounts to Comply with Reserve Requirements
According to the “Virtual Asset Real-Name Account Operation Guidelines” published by the Korea Federation of Banks (KFB) in July, the reserve requirement applies to crypto exchanges that have been issued with accounts from “real-name” local banks. These accounts refer to clients that comply with Know-Your-Customer (KYC) requirements and use the same name with the exchange as they do with the banks.
Under the KFB’s guidelines, exchanges are to set aside 30% of their daily average deposits or three billion won – whichever amount is more significant- in reserve. Reserves are, however, capped at 20 billion won. The KFB’s guidelines further introduce enhanced KYC procedures and additional authentication for collection transfers. While the new minimum reserve requirement takes effect in September, the additional KYC and verification measures are set to take effect in January 2024, Finance Magnates reports.
South Korea Introduces Clarity for the Crypto Sector
South Korea recently issued many new measures to enhance consumer protection. The country is also actively introducing more precise regulatory guidelines for the industry as it tries to fight crime and fraud and prepares to introduce new taxation guidelines.
The South Korean government initially sought to introduce a 20% tax levy on all cryptocurrency earnings but has postponed its plans until 2025. The government explained that it would first introduce regulations to protect investors and provide clarity for the industry going forward.
As such, the government recently introduced an interagency investigation team to help it manage crypto regulation and as part of its efforts to address the rising number of illicit crypto-related activities in South Korea.
In a bid to fully regulate the industry, South Korea’s Financial Service Commission issued draft rules requiring companies holding or issuing cryptocurrencies to disclose their holding in financial statements from 2024.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
