A warning has been issued from the chairman of South Korea’s top financial regulator, that a new financial law can cause major problems as early as September.
Things are about to get tricky for all 200 cryptocurrency exchanges in South Korea. Last week, the country’s National Assembly’s Political Affairs Committee held a general meeting.
Following the meeting, the chairman of South Korea’s top financial regulator, the Financial Services Commission (FSC), Eun Sung-soo, issued a warning that all of the exchanges in the country are at risk of being shut down.
Under the new and revised Special Funds Act (Act on Reporting and Using Specified Financial Transaction Information,) all cryptocurrency exchanges are required to be registered with the FSC.
“We are now accepting applications for them to officially register their business by the timeline, but no exchange operators have applied to date,” Chairman Eun explained.
Considering none of them have applied for registration, they were warned that they could be shut down in September.
The bill in question is the new and “improved” Special Funds Act that went into effect on March 25. After allowing a mandatory 6 months grace period, it will be properly enforced, starting September 24.
Tougher Requirements on Crypto Providers
When it comes to the new rules, the Special Funds Act will require any cryptocurrency providers, this includes crypto exchanges, to obtain a certification of Information Security Management System (ISMS) in addition to the issuance of real-name accounts.
In order for the exchanges to meet the new requirements, the FSC is in charge of the registration. This has caused concern among many about being able to meet the new requirements, one major issue being the real-name accounts.
Danger in Price Fluctuations
FSC communicated that profits from any cryptocurrency investment will be up for taxation, beginning year 2022. This was already announced back in February, when the Ministry of Strategy and Finance revealed that income that is generated from crypto transactions will be classified as other income and will therefore also be taxed at a rate of 20%.
Government Reminding Of Previous Warnings
Although the latest news may come as a shock for many, it shouldn’t. The FSC Chairman told the South Korean press that crypto currencies are not considered real currencies and reminded the public that the government has repeatedly warned investors about the dangers of sudden price fluctuations.
There Is Still Time
Considering there is still time left on the clock to get their affairs in order before September, the revised bill should not have to cause all 200 crypto exchanges to shut down, but there is definitely a big risk of some of them being affected.