South Korea’s Financial Services Commission (FSC) is getting ready to announce its decision on possible sanctions against Upbit. The decision comes after findings that Upbit didn’t fully meet customer verification requirements meant to prevent money laundering.
Upbit Sanctions Decision Imminent
The FSC’s Chairman, Kim Byoung-hwan, stated that the review process would soon wrap up, addressing concerns about delays raised by lawmaker Kim Jae-seop.
During a National Assembly session, Chairman Kim assured the public that the FSC is working to resolve the matter quickly, pointing out it could affect market dynamics. He clarified that the review process has taken longer than initially thought because of multiple meetings to gather input from all parties involved.
Despite the process taking time, Kim indicated that a resolution would be reached soon, given the possible effects for the crypto market in South Korea.
Related: South Korea Accelerates Crypto Regulations as U.S. Policies Shift
AML Compliance Issues Trigger Scrutiny
The Financial Intelligence Unit (FIU) conducted an inspection as part of Upbit’s application to renew its virtual asset service provider (VASP) license and discovered several suspected breaches of anti-money laundering (AML) regulations, including problems in the exchange’s Know Your Customer (KYC) procedures.
It is common law that financial institutions in South Korea must verify their customers’ identity using government-issued ID cards to prevent illicit activities. However, Upbit’s processes were found to be incomplete, leading to the discovery of hundreds of thousands of suspected violations.
S. Korea to End Ban on Institutional Crypto Trading
Alongside this matter, the FSC has also announced plans to lift the ban on institutional cryptocurrency trading, which has been in place for nearly eight years.
This policy shift, planned to happen in two phases throughout 2025, will align with the increasing demand for blockchain-based financial products while keeping in step with global trends.
Related: South Korea Reverses Course: Institutions Get Green Light for Crypto Trading
From the second half of 2025, organizations such as universities and charities will be permitted to sell crypto donations.
Additionally, the FSC will introduce new guidelines to prevent market manipulation, including stronger listing standards and minimum supply requirements for new crypto assets.
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