Key takeaways:
- South Korean officials have shifted their attention to over-the-counter (OTC) cryptocurrency exchanges.
- The phrase “OTC crypto market” refers to exchanges the government does not recognize.
Due to growing concerns about their usage for illegal purposes, South Korean officials have shifted their attention to over-the-counter (OTC) cryptocurrency exchanges. According to reports, the nation’s financial officials are watching the OTC cryptocurrency trading.
Deputy Chief Prosecutor Ki No-Seong of the Financial Services Commission (FSC), Park Min-woo of the FSC, and other significant regulatory officials were reportedly present at a session on “Criminal Legal Issues Related to Virtual Assets” with a focus on the unregulated OTC crypto market.
No-Seong advocated for OTC crypto market regulation throughout the event owing to worries about money laundering. Seong’s statement was translated to mean:
“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.”
The phrase “OTC crypto market” refers to exchanges the government does not recognize. Peer-to-peer (P2P) exchanges and other unregulated platforms are included in digital currency OTC transactions.
The most significant legal cryptocurrency platform in South Korea, Upbit, offers 172 coins, whereas OTC marketplaces can offer up to 700 cryptocurrencies.
The investigation mentioned several cases where digital assets were converted into Korean won through OTC platforms. Between October 2021 and October 2022, three people were detained and indicted on allegations of engaging in illicit foreign exchange transactions by the International Crimes Investigation Department of the Incheon District Prosecutors’ Office.
According to the report, the arrested trio was found to have purchased digital currency valued at $70.9 million (94 billion won) from foreign OTCs at Libyans’ behest before being converted into cash to Korea. The Korea Customs Service estimates that illegal foreign exchange transactions involving digital currency were approximately $4 billion (5.6 trillion won) in 2016.
South Korea has established several legislations to combat cryptocurrency-related crimes over the years and has earned a reputation for having strict crypto regulations. In the wake of Terra‘s failure, the nation’s regulators have taken a more proactive approach.
