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South Korea Takes Aim at Unregulated OTC Cryptocurrency Trading to Combat Money Laundering

CryptoSouth Korea Takes Aim at Unregulated OTC Cryptocurrency Trading to Combat Money Laundering

South Korea is taking significant action to address concerns regarding over-the-counter (OTC) cryptocurrency trading and its potential involvement in criminal activities. Key regulators, including deputy chief prosecutor Ki No-Seong and Park Min-woo from the Financial Services Commission (FSC), have emphasized the need for stricter regulation.

OTC cryptocurrency markets operate outside official government-sanctioned platforms, making them challenging to monitor and regulate effectively.

The primary concern lies in the unchecked growth of OTC cryptocurrency trading and its potential misuse in criminal activities. South Korean authorities, recognizing the risk of money laundering associated with these markets, are determined to bring them under control.

These OTC cryptocurrency entities, often associated with foreign corporations, can easily convert digital currencies into South Korean won or other global currencies while evading the country’s stringent cryptocurrency laws.

Unlike regulated platforms like Upbit, which offer a limited selection of cryptocurrencies, OTC platforms can provide access to a broader range of up to 700 cryptocurrencies, making them more attractive to traders.

Concrete instances of OTC platforms being used for unauthorized foreign exchange transactions have come to light. In one case, individuals conducted a $70.9 million digital currency transaction through overseas OTCs, converting it into cash in South Korea. The Korea Customs Service estimated that such unauthorized transactions using digital currency amounted to around $4 billion in the previous year alone.

South Korea has a history of implementing strict cryptocurrency regulations to combat criminal activities in the crypto space. This determination has intensified following high-profile cryptocurrency incidents, such as the Terra collapse.

South Korea’s efforts to regulate the OTC cryptocurrency market reflect a global trend toward establishing clear and enforceable boundaries in the evolving world of digital assets. As traditional finance and decentralized digital currency converge, countries worldwide face the choice of taking an active regulatory stance or allowing developments to unfold passively.

By FCCT Editorial Team

Disclaimer: The views expressed in this article are independent views solely of the author(s) expressed in their private capacity.

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