South Korean regulators look set to show their consideration to the over-the-counter (OTC) crypto market, with indications regulation could possibly be on its means.
The nation has moved to shore up its regulatory system this 12 months within the wake of the so-called “Terra-Luna scandal,” which left 1000’s of home LUNC traders out of pocket.
The information has additionally been dominated by a high-profile political scandal involving token-owning lawmakers.
Multiple (equally high-profile) allegations of the market manipulation of so-called “kimchi coins” have additionally rocked the nation.
But to date, regulation has targeted on centralized crypto exchanges.
Per Asia Kyungjae, “prosecutors and financial authority officials” are actually “directly mentioning” the “problems of” the OTC market.
OTC merchants have been implicated with smuggling and tax evasion costs pertaining to “kimchi premium” buying and selling.
The kimchi premium is a bull market phenomenon whereby retail BTC costs rise a lot sooner in South Korea than elsewhere on the planet.
During these intervals, South Korean exchanges’ BTC costs can climb to over 30% of the worldwide common.
In the previous, this has seen South Korean merchants shopping for Bitcoin (BTC) from OTC merchants based mostly in international locations corresponding to China.
Kimchi premium merchants then swap these BTC tokens for fiat on home crypto exchanges.
The police and prosecution officers have clamped down onerous on kimchi buying and selling rings, unearthing related shell corporations, unlawful semiconductor buying and selling, and treasured metallic smugglers within the course of.
But the South Korean OTC market stays largely unregulated.
OTC Crypto Traders: In South Korean Regulators’ Crosshairs?
An occasion held earlier this month on the Supreme Prosecutors’ Office signifies that legislation enforcers need to change that.
The occasion was titled “Legal Challenges in the Virtual Assets Field” (literal translation), and noticed participation from the prosecution service.
Representatives from the Financial Services Commission and the Seoul Southern District Prosecutors’ Office Virtual Asset Crime Joint Investigation Team additionally attended.
Speakers on the occasion claimed “more” and “stronger” crypto regulation was required.
And they claimed that OTC markets have been changing into “the epicenter of virtual currency-related crimes,” corresponding to “fraud and money laundering.”
Deputy Chief Prosecutor Ki No-seong referred to as for regulation for “OTC companies,” explaining:
“Illegal OTC [crypto] companies have overseas arms and are engaged in the business of converting illegally obtained virtual currency into Korean won or foreign currency. We must regulate these companies.”
Attendees referred to as the OTC market the “top 1% market,” claiming that it was “mainly used by high-value investors.”
Some OTC marketplaces lively in South Korea, they claimed, present “trading services for over 700 coins.”
Hong Ki-hoon, a professor of Business Administration at Hongik University, mentioned,
“The investigative and financial authorities are now continuously sending strong messages about the virtual currency market. In the future, I expect stronger [regulations] to be imposed on virtual currency market manipulation and money laundering.”
In February this 12 months, police mentioned that they had closed down a suspected worldwide OTC-kimchi premium buying and selling ring working in South Korea.
A bunch of people, together with a Libyan and three North Korean defectors, have been charged with violations of the Specific Financial Information Act and the Foreign Exchange Transactions Act.
Prosecutors mentioned the ring had purchased “over $76 million” price of cryptoassets from OTC distributors and abroad exchanges.
These cash have been then bought “on behalf of overseas clients” on home exchanges, prosecutors alleged.