In a robust move forward, South Korea’s financial watchdogs have taken the bull by the horns in their latest crackdown on crypto use in insolvency cases. Adding fresh ammunition to their arsenal, they have started to seize virtual assets for the first time in 2023.
Korea Deposit Insurance Corporation (KDIC), a subsidiary of the Financial Services Commission, has typically stepped in on behalf of depositors when individuals and firms declare bankruptcy. Previously, the KDIC’s powers were restricted to traditional financial entities. However, those in insolvency often exploited a loophole by converting their funds into crypto and parking them in digital wallets.
This year the KDIC identified movable assets in the form of crypto in 29 insolvency cases. In 16 of these instances, it took decisive action to seize and secure more than $7,400 worth of virtual currency. This marked shift follows various regulatory amendments enabling the KDIC to request data from banks working in concert with home-based crypto exchanges.
Since September 2021, local exchanges were mandated to link customer wallets to domestic bank accounts, each subject to confirmation of both their name and social security number. This mechanism has successfully eliminated the prospect of anonymous trading on national platforms while permitting agencies like the KDIC to engineer effective solutions in tackling insolvency cases, such as requesting account details from collaborating banks.
Hints indicate the KDIC may soon get an additional shot in the arm. Legislators have proposed a bill in the National Assembly that could furnish investigators with the prerogative to ask crypto exchanges for customer data outright. Their rationale is that with the sophistication of asset concealment on the rise, regulating bodies should be similarly empowered.
Though views on the matter remain divergent, the report concludes that the volume of seized crypto assets could see an uptick as KDIC officers fine-tune their collection prowess. This comes at a critical juncture as critics cast accusations of Korea’s crypto policies becoming progressively restrictive. Meanwhile, some of the neighboring nations like Japan are on the verge of deregulating – perhaps an approach South Korea can experiment with in the future. The unfolding canvas promises more twists and turns in the intriguing world of crypto regulation.
Source: Cryptonews
