South Korea may tighten requirements for licensing crypto business

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Against the backdrop of a tense situation in the stablecoin market, the Financial Services Commission of South Korea proposes to register crypto companies depending on their level of risk for investors.

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On behalf of the federal government of South Korea, the Financial Services Commission (FSC) has produced a report in which urged The National Assembly of the country to adopt regulations to protect local cryptocurrency investors from the consequences of insider trading, pump and dump schemes, and fictitious trading.

The regulator sees the need to develop stricter rules than those required by the Capital Markets Law. In the new legislation, the regulator recommends the creation of a licensing system that will apply to stablecoin issuers, cryptocurrency exchanges, and companies that conduct initial coin offerings (ICOs).

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FSC recommends using different types of licenses depending on the level of risk that a cryptocurrency company poses to investors and users. The regulator also proposes to oblige issuers of stablecoins to provide the Commission with a technical document on the project.

The document should contain detailed information about the company’s officials, plans for the use of capital raised through the ICO, and information for investors about the risks associated with the project. Updates to the White Paper must be submitted seven days before the proposed changes become effective.

The regulator believes that foreign-headquartered cryptocurrency companies interested in trading their own cryptocurrency on South Korean crypto exchanges must comply with the above requirements. The supervisory authority requires the issuer of stablecoins to provide information on the use of collateral and the volume of issued cryptocurrencies.

The FSC believes that the new rules will ensure an effective fight against shadow trading activities, in which some local exchanges and stablecoin issuers have been suspected for many years. Recall that recently the FSC and the Financial Supervisory Service (FSS) launched emergency checks of local crypto exchanges to prevent the situation with LUNA.

Source: Bits

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