[Executive Summary]

• It has been reported that the FIU under the FSC has begun its process of formulating a regulation standard for virtual exchanges and banks that link real-name accounts to the exchanges. The regulation standard is expected to narrow down the differences in regulation of virtual asset exchanges in the areas such as daily transfer limit, KYC process, and the process of managing customer deposits.

It has been reported that the Korean Financial Intelligence Unit (the “FIU”) under the FSC has begun its process of formulating a regulation standard for virtual exchanges and banks that allow real-name accounts to virtual assets exchanges.

During the last month’s National Assemby’s Audit of State Affairs, some members of the National Assembly pointed out problems with virtual assets exchanges being regulated differently depending on which bank they are linked with, in terms of issuance of real-name accounts. The most prominent example of this problem is that the daily transfer limits set by each bank is vastly different; for Upbit, Bithumb and Coinone, daily transfer limit is 10 million KRW, while the limit for Korbit is 300 thousand KRW. Questions are being raised, as this structure could put banks in a relatively dominant positions in negotiating with virtual assets exchanges, and could lead to unfair trading practices.

In a private meeting hosted by the FIU on October 31st, staffs from the commercial banks that are engaged in real-name account partnerships with virtual asset exchanges, such as Kbank, NongHyup Bank, KakaoBank, Shinhan Bank, and Jeonbuk Bank, attended and discussed the problem with the FIU.

An FIU official explained that the regulation standard will standardize and narrow down the differences in regulation of virtual asset exchanges in the areas of daily transfer limit, KYC process, and the process of managing customer deposits.

It is becoming more widespread and standardized in Korea for commercial banks and virtual asset exchanges to form affiliations, following the requirement for exchanges to link real-name accounts. As the FIU’s most recent policies and regulations are likely to be reflected in the upcoming laws that are currently under discussion, it is highly recommended for the relevant and interested parties closely follow the further development.