Eternity Law International News Crypto license in South Korea

Crypto license in South Korea

September 10, 2022

Korea’s regulator, FSC, has set new rules for virtual assets regarding illicit money trafficking mechanisms. Thus, the Law governing fiscal operations’ reports and usage of this data has been revised. Law says that a crypto license in South Korea can be issued to a firm defined as a virtual asset provider – VASP; it’s applicable to enterprises related to next-mentioned:

  • virtual currencies exchange;
  • operations for VA sales and purchase;
  • VA management and keeping;
  • being intermediary or broker in conducting transactions with VA;
  • other envisaged activities.

VASPs may act as a third party intermediary between customers or consumers and VASPs. Latter is possible if another participant has the status of a certified VASP meeting relevant AML requirements; access to data about the clients of such a party also need to be open.

Two main aspects for crypto business in South Korea.

  1. VASPs are claimed to pass registration (KoFIU) prior to starting activities. Those firms that are already operating as VASPs must register in 6 months. Otherwise, they’ll get sanctions.
  2. Law introduced a new rule, according to which VASPs need to send all information about operations that exceed 1 million won. To this end, all supplier companies should implement common data exchanges solutions as soon as possible.

It’s required that only the original name be used in operations with VASP clients. Additionally, certain extra points for opening an account are set:

  • KISA certificate on the functionality and effectiveness of the data security system;
  • firm needs to certify that it has not had any fines or similar charges in the previous 5 years;
  • the presence of fixation of information from customer operations;
  • procedure for assessing risks connected with combating illegal circulation of funds.

The license for cryptocurrencies in South Korea issued to organizations not associated with VA exchange does not imply compliance with the rule regarding the use of the real name.

The FSC stated that more than two hundred cryptoexchanges operate in Korea, however, those working with crypto-assets and fiat come under Commission’s control. According to the data received, it is also stated that it is difficult for smaller companies to work in this niche, therefore, its consolidation is predicted soon.

AML policies for cryptocurrency license and business in South Korea

Regulatory basis governing cryptocoins circulation made AML compliance a prerequisite. VASP license holders who do not follow these norms face severe restrictions and sanctions. New provisions say that organizations with crypto-currency exchange license in South Korea need:

  • carry out full verification of consumers, in particular, identification of data and verification of any other info when making operations;
  • prepare and submit reports in case of distrustful actions. This requirement must be met if there are adequate grounds to know that these assets are of illegal nature, or the agent is involved in unlawful operation;
  • if operation’s amount exceeds 20 mln won, the firm must submit an appropriate report containing all data about such a transaction.

If, after new norms got enforced, a firm that owns a crypto license in South Korea did not open an authorized account with a banking institution, it will be fined 50 million won, or the owner may be sentenced to five years in prison.

Obtain a VASP license in South Korea – become a member of a reliable market with cost-effective partners and a clear legislative framework. If you intend to open a business in this direction and have chosen this particular jurisdiction, please contact us. Our experts will help you understand all the nuances and provide many options for ready-made companies with licenses to sell.

Please contact us to get more information.

You can see our current offers in the categories “Cryptocoins and licensing of cryptocurrency operations”, “Ready-made companies”, “Banks for sale” and “Licenses for sale”.

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