Korea to establish cryptocurrency policy review bureau

Representation of cryptocurrency Ethereum is placed on a PC motherboard in this image, June 29. Reuters-Yonhap

By Kim Yoo-chul

A day after the country's Financial Service Commission (FSC) chief nominee said he doesn't see cryptocurrencies as a financial asset, the FSC said Thursday it will establish an independent bureau to further strengthen the supervision of virtual assets, operators and to closely detect possible money laundering.

In a statement, the FSC said the Korea Financial Intelligence Unit (KFIU), an arm of the FSC responsible for anti-money laundering, will have the authority to manage the newly-created bureau. The "crypto asset monitoring bureau" will be assigned to monitor any suspicious financial activity on cryptocurrency assets, to decide the extension of license for cryptocurrency operators and to explore ways on how to enhance investor protection rules.

Plus, the financial regulator added the KFIU will also have a "Policy Management Planning Division" inside the soon-to-be-launched bureau. The chief of the division will take an advisory role but directly reports to the KFIU chief. Additionally, the FSC approved the requests by KFIU to have more personnel who will be assigned to monitor "all things related to the crypto market."

"The FSC's decision for the creation of an independent bureau inside KFIU with increased personnel is aimed at checking and monitoring cryptocurrency-related financial activity and preventing potential money laundering," an FSC official said.

Data provided by a lawmaker showed that younger people hold over half of the country's "household debt." The lawmaker said that such snowballing debt incurred by millennials was a result of their investment into crypto-centric assets.

The FSC has been teaming up with other financial authorities to tighten crypto regulations with the FSC providing a "six-month" grace period for the country's cryptocurrency exchange operators to utilize real-name trading accounts. The required mandate is set to expire on Sept. 24.

Cryptocurrency exchanges that fail to register with KFIU will not be permitted to operate in South Korea. The FSC said the newly-created bureau will be operational from September this year.

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