South Korea has made trading in cryptocurrencies legal by passing the amendment of the Act on Reporting and Use of Specific Financial Information. The amendment was passed today in a full session of the National Assembly.
This is yet another positive news after the Indian Supreme Court gave victory to crypto enthusiasts by curbing the central bank’s ban on banks and financial institutions to offer their services to individuals and businesses dealing in virtual currencies.
South Korea used to be the hotbed of crypto revolution but the hacking incidents of several exchanges such as Upbit set back things. But now by passing this law, the country is yet again, taking another step forward.
It has been after two years of deliberation that South Korean regulators passed this amendment making crypto trading and holding officially legal.
However, President Jae-in Moon still needs to sign it into law for this amendment to be enacted. Once it has been signed by Moon, the enactment process will begin that will take one year and a grace period of 6 months.
As per this amendment, cryptocurrency exchanges must comply with the legal requirements and that have to be by Sept. 2021.
All this time, crypto exchanges in the country have been self-governing but now these crypto-related businesses, be it exchanges, wallets, trust companies or ICOs, all will be required by law to verify their customers. The verification will be done by the real name of the client with an approved Korean bank to prevent money laundering.
This verification system has been already introduced by the Financial Services Commission (FSC), South Korea’s top financial regulator in early 2018.
Moreover, these companies would have to obtain an information security management system (ISMS) certification which is granted by the Korea Internet Security Agency (KISA). This certificate validates a company that it can secure key information assets of its own and for its users.
This certification can be very costly but must be obtained within six months or the crypto businesses run the risk of shutdown.