South Korea focuses on OTC crypto regulations as unlawful deals reach $4B

South Korean regulators have turned their focus to over-the-counter (OTC) crypto trades amid growing concerns about its use for criminal activities. The financial regulators in the country are reportedly monitoring the OTC crypto market trades.

According to a report published in a local daily, deputy chief prosecutor Ki No-Seong and Park Min-woo of the Financial Services Commission (FSC) and other vital regulatory officials attended a session on “Criminal Legal Issues Related to Virtual Assets” with a focus on the unregulated OTC crypto market. During the event, deputy chief prosecutor No-Seong called for regulating the OTC crypto market due to money laundering concerns.

A google translated version of Seong’s 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.”

The term “OTC crypto market” describes exchanges that are not officially recognised by the government. Virtual currency over-the-counter (OTC) transactions include all transactions outside regulated platforms including peer-to-peer (P2P) exchanges. According to the report, there are a total of 172 cryptocurrencies available on Upbit, the largest regulated crypto platform in South Korea, while OTC platforms offer upto 700 cryptocurrencies.

The report cited several instances of the use of OTC platforms to convert virtual assets into Korean won. The International Crimes Investigation Department of the Incheon District Prosecutors’ Office arrested and indicted three people on charges of engaging in illegal foreign exchange transactions between October 2021 and October 2022.

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The arrested trio were found to be purchasing $70.9 million (94 billion won) worth of virtual currency from overseas OTC at the request of Libyans and then sending it to Korea to be converted into cash, according to the report. The value of unlawful foreign exchange transactions made using virtual currency was estimated by the Korea Customs Service to be worth $4 billion (5.6 trillion won) last year.

South Korea over the years has become a country known for its stringent crypto regulations over the years and has several regulations in place to tackle crypto-related crimes. The country’s regulators have become more proactive in the wake of the Terra-Luna collapse.

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