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Analysis

South Korea's Financial Services Commission asks U.S. SEC to discuss spot BTC ETFs, restricts local banks' ability to issue accounts to coin exchanges, and enforces special laws

South Korean banks will be required to have sufficient anti-money laundering (AML) capabilities when issuing real-name verification deposit and withdrawal accounts (real-name accounts) to virtual asset (cryptocurrency) exchanges, and will also be required to exercise "due diligence" when deciding...

South Korea's Financial Services Commission asks U.S. SEC to discuss spot BTC ETFs, restricts local banks' ability to issue accounts to coin exchanges, and enforces special laws

South Korean banks will be required to have sufficient anti-money laundering (AML) capabilities when issuing real-name verification deposit and withdrawal accounts (real-name accounts) to virtual asset (cryptocurrency) exchanges, and will also be required to exercise "due diligence" when deciding whether to maintain the accounts.

On May 5, the Financial Services Commission of Korea announced the proposed amendments to the Enforcement Decree of the Specified Financial Information Act. The amendment will be introduced after collecting comments until the 4th of next month. First, the Financial Services Commission has established a new obligation for banks to issue real name accounts. In order for a financial company (bank) to issue a real name account to a virtual asset company, it must have sufficient capabilities to prevent money laundering and public intimidation financing, such as securing manpower and building and operating physical facilities. In other words, it must be able to take responsibility for the risks associated with issuing an account to a virtual asset exchange. After issuing a real name account, a financial firm must also exercise due diligence to determine whether the account should be maintained. The Financial Services Commission has established a rule that a financial firm must exercise due diligence to ensure that the decision to open and maintain a real name account is properly made. In addition, the risk assessment criteria related to the decision to open and maintain a real-name account and the duty of due diligence will be determined and announced by the head of the Financial Information Analysis Institute.

Meanwhile, Lee Bok-hyun, chairman of the Financial Supervisory Service of Korea, announced the 2024 work plan and answered reporters' questions at the Financial Supervisory Service in Yeouido, Seoul, on May 5. "I will meet with SEC Chairman Gary Gansler to discuss virtual asset issues and bitcoin spot ETFs," Lee said, adding, "The impact of SEC policies on the world is important now. We need to meet and discuss [this year]."

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