South Korea Regulators Declares Crypto Crime Unit as Official Department

The rise of crypto crime has forced law enforcers to explore ways to shield investors from exploitative activities. In a recent report, the South Korean regulators revealed plans to launch a crypto investigative unit to address the financial crimes in the region.

According to the local news site Segye Ilbo, the existing crypto investigative unit will become a permanent regulatory agency.

South Korea Officiate Crypto Crime Unit

Before the official launching of the new law enforcement unit, the South Korean Ministry of Justice and Public Administration and the Ministry of Interior plan to discuss the matter at the beginning of next month.

Initially, the crypto crime investigative unit operated as a temporary agency working towards combating crime. In the upcoming meeting, the South Korean policymakers will upgrade the crypto crime investigative unit from temporary to permanent status.

This implies that the official launch of the new department will require the South Korean government to finance the project to meet the expected standard.

The report indicates that the crypto crime investigative unit was launched in July last year. The authority appointed 30 professionals from the Southern District Prosecutors Office to support running the new department. 

Regulators Team Up to Address Crypto Crime

With the new changes, the regulators are expected to expand the crypto crime investigative unit workforce. The new department has been working closely with the South Korean Prosecutors Office, the Financial Intelligence Unit (FIU), the National Tax Service and the Financial Supervisory Service. 

The crime investigative unit was launched when South Korea faced increased crypto-related crimes.  In 2023, the FIU team noted that over 16,076 suspicious transactions related to digital assets were reported to South Korean authorities. 

The number of suspicious transactions increased by 48% in 2023.  The surge in crypto-related crimes compelled the South Korean authorities to implement various measures to address the concerns. 

In April, South Korean regulators unveiled plans to launch new guidelines for listing digital assets. The regulators stated that the new provision would restrict the listing of specific tokens on centralized exchanges

The new rules are expected to take effect in May 2024. This implies that digital assets with a history of hacking will not be listed on South Korean platforms unless the cause of the hack is identified. 

South Korean Unveil New Crypto Rules

Also, the new rules restrict foreign digital assets from being listed on local exchanges unless the issuer provides a technical manual published in the South Korean market. The latest listing requirements align with the amended Virtual Assets User Protection Act, which will take effect in July this year. 

The revised rules aim to protect investors from any exploitative activity.  The South Korean regulators claimed that the revised Virtual Asset User Protection Act seeks to protect the interest of crypto investors in the region.

Under the new rules, illegal trading, market manipulation, and failure to disclose important information on digital assets will be considered unlawful. The new rules will impose hefty fines and sentencing of non-compliant crypto firms

The new rules grant the South Korean FSC the legal power to supervise the operations of crypto firms. The FCS will assess whether local virtual asset service providers’ operation aligns with the new rules.

Reportedly the Virtual Asset User Protection Act was drafted in June last year to prevent the recurrence of another FTX that adversely affected the operation of major crypto firms. Days ahead of the South Korean general election, various politicians have revealed plans oppose the implementation of Virtual Asset User Protection Act if elected. 

In an interview with Bloomberg, the Democratic Party of South Korea revealed plans to ease the prohibitive measures on issuing crypto exchange funds (ETF).  The opposition party plans to create a friendly environment to allow local investors to engage in the buying and selling of ETFs. 

Besides imposing restrictive measures, the South Korean authority plans to collaborate with the global law enforcers to address financial crimes conducted by the North Korean illicit groups.

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