*Scope of VASPs still vague after amendment of Specified Transaction Information Act.

*Cyrpto businesses providing multi-sig technology may or may not fall within the scope of VASPs defined by Korean law.

Multi-sig(Multisignature) technology refers to the requiring of multiple keys to authorize a cryptocurrency transaction, rather than a single key. Many crypto wallet service providers provide this technology due to its high level of security. Two or three keys are needed to authorize cryptocurrency transactions instead of one. The service provider and the user usually split the keys. For a hacker to make a cryptocurrency transaction, he needs to hack all three keys—which makes hacking very less likely. Virtual assets service providers that deal with custody, administration of user assets, wallet service for companies use this multi-sig technology most frequently.

Are service providers who provide multi-sig technology a VASP by Korean law? If you fall under the scope of VASPs by Korean law an ISMS certificate is required, and a range of other information needs to be reported to the KoFIU. (For more information click here.) Enforcement of the amended law is to be enforced this year March(March 25, 2021). Companies conducting crypto businesses in Korea are getting ready for this change in the legal environment. However, the KoFIU recently announced that it will define VASPs as those who have independent control over private keys.

“The KoFIU recently announced that it will define VASPs as those who have independent control over private keys.”

Therefore, questions arise as to which crypto firms will fall under the scope of Korean VASPs. Therefore, it is necessary for crypto firms who are conducting or will conduct cryptocurrency business in Korea to get legal advice. Cha & Kwon Law Offices strongly advise crypto firms to prepare for the forthcoming change as firms that fail to comply with AML obligations may be subject to civil and/or criminal charges.