Crypto asset business owner group takes shape
The cryptocurrency industry and relevant government departments are in the final stages of negotiations related to the enforcement ordinance for the revised Act on Reporting and Using Specified Financial Transaction Information. The main points of contention are inclusion in the “cryptocurrency business owner” group and the Travel Rule. The Korea Financial Intelligence Unit (FIU) and other related government departments have been collecting feedback from the industry and discussing the details of the ordinance. According to materials obtained by Decenter on Sept. 2 regarding the ordinance, the “cryptocurrency businesses owner” group as of now encompasses cryptocurrency exchanges, custodians and wallet services businesses. Within the industry, there was confusion as to whether all companies that deal with cryptocurrency are subject to the laws. At the initial stages, the government will most likely demand certain businesses that are red-flagged for money laundering to meet certain obligations. Then it will proceed to apply the law to firms in three sectors that have the closest ties to cryptocurrency. It is predicted that if the law goes into effect, only about 10 cryptocurrency exchanges will satisfy the standards for reporting. As of the beginning of August, Korea has 59 cryptocurrency exchanges, financial authorities have estimated. If a person is considered a cryptocurrency business owner, then they need to report their business regardless of the size. They also need to acquire a separate bank account for authentication, and they need to get ISMS certification. If the conversion service between the won is not used, then it may be exempt from the virtual account requirement for authentication. A clause on dark coin prohibition will also be established. With dark coins, the sender and receiver cannot be identified. Dark coins are in direct opposition with the Travel Rule, which requires the identification of those involved in cryptocurrency transactions. Some cryptocurrency exchanges last year decided to delist dark coins. The cryptocurrency industry sees some room for improvement in the enforcement ordinance. For instance, some think that cryptocurrency wallets should not be in the “cryptocurrency business owner” group, as they do not offer conversion services. According to resources obtained by Decenter, blockchain platforms that undertook initial coin offerings are considered part of the group if they offer a wallet service. Ground X’s Klip is a digital asset wallet for cryptocurrency. In this case, Ground X must become ISMS authenticated and have anti-money laundering procedures in place. However, since it does not offer conversion services between the won and cryptocurrency, it is not subject to the authentication requirement. There are also issues with the Travel Rule. Some think that it is difficult to apply the rule when transferring cryptocurrency to individual wallets like MyEtherWallet and MetaMask. The FUI has said that it will take into consideration all opinions. In order for the revised Act on Reporting and Using Specified Financial Transaction Information to take effect next June, there needs to be a legislative notice in advance by the end of September. Industry insiders predict that a more detailed version of the enforcement ordinance will be disclosed this month.