South Korean regulators struggle with a significant surge in “suspicious” cryptocurrency transactions

There has been an alarming increase in questionable cryptocurrency transactions processed by South Korean financial institutions.

According to a new study from South Korea’s financial regulators, they have seen a dramatic rise in questionable cryptocurrency transactions by suppliers of virtual assets in the last year.

South Korea is actively working to regulate the cryptocurrency sector and create a fair economy, which is why the statement is timely.

There was a dramatic spike in questionable cryptocurrency transactions in 2023, according to the Financial Intelligence Unit (FIU).

As a result, “virtual asset service providers reported an increase of almost 49% in the number of questionable transactions to FIU compared to the previous year.”

The FIU also claims to have been more communicative and cooperative with other law enforcement organizations. In doing so, it hopes to strengthen its stance against illegal bitcoin transactions.

According to Statista’s projections, South Korea’s cryptocurrency business will generate $2.2 billion in revenue per year by the year 2027.

But the Virtual Asset User Protection Act will go into effect in South Korea on July 19, 2024. This indicates that the approach to crypto regulation is going through a major shift.

According to a recent article from BeInCrypto, the legislation would have severe punishments. People who deal in illegal cryptocurrency and make more than $3.7 million are subject to life in jail without the possibility of release.

Nevertheless, its main goal is to safeguard the growing cryptocurrency business in preparation for its expected significant expansion in the next years.

Conversely, not all enforcement operations in the nation have resulted in beneficial results, despite substantial enforcement efforts in the crypto industry.

Authorities in South Korea have accused cryptocurrency dealers of participating in arbitrage between international and domestic markets, according to a recent article by BeInCrypto. But the first trial ended with their acquittal.

Also, these dealers allegedly tried to cash in on the “Kimchi premium”—the pricing differential between South Korean and international exchanges.

According to the prosecution, this price differential varied between 3 and 5 percent, generating a profit of approximately $3.2 billion.

Also Read: A Growing Number of Human Trafficking Cases Involving Bitcoin, According to FinCEN