SEOUL, Oct. 20 (Korea Bizwire) – A task force comprised of financial governance bodies such as the FSC (Financial Services Commission), the KFTC (Korea Fair Trade Commission) and the Ministry of Justice is currently in the process of reviewing existing financial law with the aim of laying out explicit parameters for punishable actions regarding the burgeoning cryptocurrency industry.
As cryptocurrencies like Bitcoin soar in value, increased investment from potential investors has been matched by reports of fraudulent behavior within the industry.
Data from the Financial Supervisory Service (FSS) revealed that the agency opened 27 investigations into cases of suspected infractions of the Act on the Regulation of Conducting Fund-Raising Business Without Permission this year. Last year, the financial watchdog had investigated 13 such cases.
In June, a group of five who pulled in 7 billion won in funds through a multi-level marketing scheme were arrested and are now being held in custody. They were allegedly selling the cryptocurrency OneCoin with promises of a ten-fold return on buyers’ investment.
The government has been cracking down on illegal outfits like the one above, but their efforts are inhibited by the fact that existing legislation (Act on the Regulation of Conducting Fund-Raising Business Without Permission) does not include the terms and relevant detail pertaining to modern financial instruments like cryptocurrencies.
The task force plans to remedy this lapse by amending the regulations to include “cryptocurrency exchange and simulated cryptocurrency exchange”. Punishment will also become more severe, with the maximum prison term and fine levied increasing from the previous five years and 50 million won to 10 years and 500 million won.
Yet unspecified, the task force is also planning on including provisions to allow for the confiscation of profits generated from criminal activity.
Overall, the mindset of the financial departments is one geared towards greater oversight of the cryptocurrency industry.
Additional details regarding the task force’s proposed revisions include regulations to prevent identity theft, ensure greater transparency in market dealings, and ban multi-level marketing sales practices.
Sellers requesting buyers’ credit information and unfair business practices like manipulating market prices will also be criminalized.
To require cryptocurrency sellers to self-regulate against the possibility of money laundering, the revisions will include an amendment to the Act on Reporting and Using Specified Financial Transaction Information.
This would place responsibility on the seller to report any activity perceived as wrongdoing.
An official from the FSC said the task force is aiming for the revisions to pass in the National Assembly before the end of the year.