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South Korea prioritizes OTC cryptocurrency regulations amid $4 billion in illicit transactions.
Regulators in South Korea have shifted their attention to over-the-counter (OTC) cryptocurrency transactions amid rising apprehensions regarding their potential use in illicit activities. The nation’s financial authorities are reportedly keeping a close watch on the OTC crypto trading market.
A report from a local newspaper indicated that deputy chief prosecutor Ki No-Seong, along with Park Min-woo from the Financial Services Commission (FSC) and other key regulatory figures, participated in a session titled “Criminal Legal Issues Related to Virtual Assets,” concentrating on the unregulated OTC crypto sector. During this meeting, deputy chief prosecutor No-Seong advocated for the regulation of the OTC crypto market due to concerns surrounding money laundering.
A translated version of Seong’s remarks stated:
“Illegal virtual currency OTC firms have foreign entities and are involved in converting unlawfully acquired virtual currency into Korean won or other currencies. It is essential to regulate these firms as unreported virtual asset trading operations.”
The phrase “OTC crypto market” refers to exchanges that lack official government recognition. Virtual currency over-the-counter (OTC) transactions encompass all dealings conducted outside of regulated platforms, including peer-to-peer (P2P) exchanges. The report noted that Upbit, the largest regulated crypto exchange in South Korea, lists a total of 172 cryptocurrencies, whereas OTC platforms provide access to up to 700 cryptocurrencies.
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The report highlighted multiple cases of utilizing OTC platforms to exchange virtual assets for Korean won. The International Crimes Investigation Department of the Incheon District Prosecutors’ Office apprehended and charged three individuals for participating in illegal foreign exchange transactions from October 2021 to October 2022.
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The trio was reported to have acquired $70.9 million (94 billion won) worth of virtual currency from overseas OTC at the behest of Libyans and subsequently sent it to Korea for cash conversion, according to the report. The Korea Customs Service estimated that the value of illegal foreign exchange transactions involving virtual currency reached $4 billion (5.6 trillion won) last year.
Over the years, South Korea has established a reputation for its rigorous crypto regulations and has implemented various measures to combat crypto-related offenses. The nation’s regulators have adopted a more proactive stance following the collapse of Terra-Luna.
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