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Draft of financial reporting act creates stir in blockchain

The pre-announcement of the Act on Reporting and Using Specific Financial Transaction Information is attracting a great deal of attention in the cryptocurrency industry. Smaller crypto exchanges will likely take a hit from the new legislation since the rule handed banks the right to issue the accounts needed for crypto trading. The Financial Services Commission said on Nov. 2 that the regulator will have a 40-day preannouncement period between Nov. 3 and Dec. 14 to collect opinions about the legislation before the law comes into effect. The enforcement decree will narrow the definition of cryptocurrency and cryptocurrency businesses and specify the criteria required for the issuing of bank accounts for transactions. Many industry players closely watched how the conditions will be set. The rule imposed a number of requirements, including those related to sending initial cash deposits to other financial institutions, acquiring information security management certification, and separately managing client information. The final requirement is about financial institutions assessing the risks about money laundering at crypto business operators including the exchanges. Banks will also decide whether to issue crypto accounts. Crypto exchanges argued that the right should belong to them – not banks – if the exchanges meet the criteria set by the financial regulator. A source at the Financial Services Commission said that “We had a lot of discussion about the issue, but concluded that it is not appropriate because the deal is a private transaction between the bank and client.” “Since each bank has different stances about issuing the accounts, so the bank should decide whether they will offer the accounts,” the source said. But the crypto players said that the rule is biased towards banks. “It is regrettable that the government is not willing to grow the crypto industry,” said a source in the industry. “To grow the market, we need a well-formed regulatory framework.”

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