"Real name accounts should be compulsory when requirements are met"
What would people operating businesses using virtual assets need following the revision of the act on reporting and using specified financial transaction Information? A discussion on this topic was held online on June 12. The impact of the regulation on the exchange market and business people and a regulation that demands the personal information of the recipient of virtual assets were the primary issues discussed. Hanbitco Managing Director Choi Ho-chang, Argos Director Son Sung-ho, lawyer Kwon O-hoon from Ohkims Law & Company and Techfi Representative Director Baek Nam-jung took part in the discussion. Below are edited excerpts. Q. How does the revision of the act affect people doing business through virtual assets? Choi: From a business perspective, regulations aimed at preventing money laundering and making information security management systems compulsory, securing real name deposit and withdrawal accounts and separating customer assets and company assets should all be considered. Also, the fact that the use of privacy coin, which highlights anonymity, could be restricted should be considered. From the user perspective, adopting the revision of the act isn’t bad. Lots of disqualified cryptocurrency exchanges will be screened out, enabling them to use credible and transparent transaction windows. But if virtual assets are incorporated into the existing system, there is a risk of a taxation burden. In terms of the industry, business in regards to regulations could be expanded. Grafting [virtual currency] with traditional financial markets, or the birth of the derivative market, could also be born. Sohn: There are a lot of start-ups in the industry of fintech or virtual assets, so costs are always a huge burden. Mid to small cryptocurrency business operators could suffer a year or two of hardship. Kwon: Following the revision, people operating businesses using virtual assets have to report to the Korea Financial Intelligence Unit. It’s just like a license system. Specific details will be released in the second half of the year. In this case, business operators will feel confused about how to prepare. Q. Once the enforcement ordinance is unveiled, exchanges will be most affected. Choi: Real name verification accounts are the issue that should be considered with particular attention. It’s one of the requirements the financial intelligence unit could refuse to process. A legal stipulation is required to issue an account. Banks should be required to issue an account if certain requirements are met, and only be able to refuse to issue an account if the requirements aren’t met. Companies should regularly announce publicly whether they are actually holding onto customer’s virtual assets. As much as the foundation of the act is to prevent money laundering and raise transaction transparency, there will be a limit to privacy coins that highlight anonymity. But the concerns are [privacy coins] getting more shady to avoid regulations. Q. Will virtual financial products like Grayscale’s GBTC be released in Korea once the revision of the act is enforced? Kwon: Unfortunately, the chance is low. The definition of a virtual asset isn’t yet specific. There is just a mention of money laundering. Investment and funds using virtual asset have been banned by the financial authorities in the past. So the Financial Services Commission will have to roll out specific guidelines.