The financial regulator in South Korea is preparing to step up its surveillance of the crypto industry ultimately.
Cryptocurrency regulation appears to be getting out of hand in South Korea. Thus, the FSC plans to increase monitoring to the next level – in line with a communication set to carry audits at all 60 of the nation’s cryptocurrency exchanges; aligned with the police and independent IT inspectors.
After being contested for stalling and “neglecting” the nation’s crypto industry, Seoul returned full power over the crypto industry to the senior financial controller, the Financial Services Commission (FSC).
South Korea’s FSC has taken to its new role with apparent determination, charging the 30 principal crypto exchanges to its headquarters on three different occasions.
This group includes crypto exchanges that have either already received the required Information Security Management System (ISMS) data protection certification; needed to remain operating after September 24 or are in the process of obtaining certification. After September 24, FSC will require exchanges without ISMS, banking contracts, and more to shut down.
Local media outlets reported that the FSC had carried out a seven-day “due diligence” on-site audit at one of Seoul’s biggest exchanges early this month. Although, it seems that the FSC wants to go one step beyond. Following a heap of minor exchanges that seem to have no plan to request operating licenses began shutting down. Thus, locking out investors from their funds, resulting in fears of “intentional bankruptcies.”
As reported by Donga, the FSC has been driven by panics that dishonest firms may attempt to declare bankruptcy on the eve of September 24 to evade reimbursing fiat and tokens to their clients. Even possibly utilizing its prior “due diligence” test as a dry run; the regulator will now implement on-site inspections at all of the remaining crypto exchanges in the country.
The regulator has worked with other government departments and state-owned IT companies as part of its attempts; which will require a “complete investigation of corporate records.” This will also include trading platforms’ “digital coin management and investor security” procedures.
The country has also enlisted independent, private-sector IT consultants to join auditors with their investigations.
The authorities sent out a warning that:
Possible crypto exchanges that will not cooperate will likely see themselves on the wrong side of the law.
The inspection teams will be given the power to “seize” documents, computer hardware, and more. The investigation teams will also be authorized to “search” premises “with the help of the police,” if necessary. In addition, the units have been directed to “focus on exchanges suspected of denying on-site investigations or illegal activities.”
Donga cited a government official as saying:
“Failure to cooperate with the investigation teams may be understood as efforts to concealing bankruptcy. We intend to look into such matters, even if we have to enlist the police force to do so.”
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