South Korea Moves to Regulate OTC Crypto Deals Worth $4B


South Korean regulators are reportedly monitoring the Over-the-Counter (OTC) crypto market trades as concerns rise about its use for criminal activities. A session was held on “Criminal Legal Issues Related to Virtual Assets” with a focus on the unregulated OTC crypto market. Deputy chief prosecutor Ki No-Seong and Park Min-woo of the Financial Services Commission (FSC) and other regulatory officials attended the event.

No-Seong called for regulating the OTC crypto market due to money laundering concerns. His statement read: “Illegal virtual currency OTC companies have overseas corporations and are engaged in the business of converting illegally obtained virtual currency into Korean won or foreign currency. There is a need to regulate these companies as undeclared virtual asset trading businesses.”

OTC crypto market refers to exchanges that are not officially recognised by the government. Virtual currency over-the-counter (OTC) transactions include all transactions outside regulated platforms, such as peer-to-peer (P2P) exchanges. Upbit, the largest regulated crypto platform in South Korea, has 172 cryptocurrencies available, while OTC platforms offer up to 700 cryptocurrencies.

In several instances, OTC platforms have been used to convert virtual assets into Korean won. The International Crimes Investigation Department of the Incheon District Prosecutors’ Office arrested and indicted three people for engaging in illegal foreign exchange transactions between October 2021 and October 2022. The trio was purchasing $70.9 million (94 billion won) worth of virtual currency from overseas OTC at the request of Libyans, then sending it to Korea to be converted into cash. The Korea Customs Service estimated the value of unlawful foreign exchange transactions made using virtual currency to be worth $4 billion (5.6 trillion won) last year.

South Korea is known for its stringent crypto regulations to tackle crypto-related crimes. In light of the Terra-Luna collapse, the country’s regulators have become increasingly proactive.

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