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South Korea has announced to eliminate all cryptocurrency-related illegal activities including money laundering. The country plans to end the illicit activities by June as the price of the digital currency skyrockets.
This crackdown has been fuelled by the recent demand for bitcoin and the spike in the sales of cryptocurrencies. This has raised concerns about suspicious investments and the possibility of illegal activities for the Office for Government Policy Coordination.
“There is a need to pay special attention to the occurrence of illegal activities using virtual assets,” Koo Yun-Cheol, head of the office, said at a vice-ministerial meeting on cryptocurrencies.
The financial regulator of the country, the Financial Service Commission (FSC), is demanding that the local financial institutions strengthen their scrutiny on transaction of digital currency. If the local businesses suspect any sign of money laundering, they are required to report them to the Financial Intelligence Unit (FIU). This agency is responsible to investigate the unlawful transfer of money.
The financial watchdog, the Financial Supervisory Service, and the finance ministry will also keep a watchful eye on the transfers of digital currency out of the jurisdiction for any illegal activity. The tax sector will also be vigilant of the tax dodgers that are hiding their assets in digital currency to avoid paying taxes.
As the stock market remains down, investors are flocking towards crypto assets, seeing it as a lucrative asset during the COVID-19 outbreak. For the first time in South Korea, Bitcoin topped the US $72,000 per unit in mid-April. The digital currency is presently trading at approximately 75 million Won. The total value of daily cryptocurrencies transactions on 14 local exchanges is estimated to the US $21.6 billion.
This is so much more than the daily turnover of 19.1 trillion Won in the previous month of sticks by retail investors including on the secondary as well as the main stock markets.
Bank of Korea Gov. Lee Ju-yeol warned, “last week that virtual assets are exposed to high price swings, potentially threatening financial stability when excessive investments are made.”