South Korean Banks May Gain Authority to Investigate Virtual Asset Business

On April 20th, it was announced that South Korean banks may have the authority to investigate virtual asset business. According to sources from the Political Affairs Committee of the South Korean National Assembly, the Bank of Korea is seeking to clarify in the Virtual Asset Law that banks have the right to require virtual asset operators and issuers to submit data. Previously, the South Korean Financial Commission did not support this plan, but now the institution intends to agree to it. At present, Congress is collecting government opinions, and the Financial Services Commission plans to formally express this position at the first subcommittee of the bill on the 25th.

Korean media: Bank of Korea may have the right to investigate virtual asset business

**Introduction**
On April 20th, 2021, it was announced that South Korean banks may be given the authority to investigate virtual asset business. The move is aimed at increasing transparency and regulation in the emerging sector. The Bank of Korea is seeking to clarify the Virtual Asset Law to ensure that banks have the right to demand data from virtual asset operators and issuers. The South Korean Financial Commission, which had previously not supported this plan, intends to agree to it now. Congress is currently collecting government opinions, and the Financial Services Commission plans to formally express this position at the first subcommittee of the bill on the 25th of April.
**What is the Virtual Asset Business?**
In recent years, the rise of virtual asset business has been exponential. Virtual assets refer to any asset or security that is traded, stored or transferred on the internet, without any tangible form. The virtual asset business includes the trading of virtual currencies such as Bitcoin and Ethereum, as well as other digital assets such as tokens, coins, and any other financial derivatives. The operating and issuing of these virtual assets are carried out by virtual asset operators and issuers.
**Rationale for Banks’ Authority to Investigate Virtual Asset Business**
The South Korean government has expressed concern about the lack of transparency and regulation in the virtual asset business. The government believes that virtual assets are vulnerable to illegal activities such as money laundering, terrorism financing, and other fraudulent activities. Additionally, the lack of regulation in the sector raises concerns about investor protection and financial stability. To counter the lack of regulation and transparency, the government plans to establish a regulatory framework for virtual asset business. Banks’ authority to demand data from virtual asset operators and issuers is a step towards achieving this aim.
**Current State of Virtual Asset Business in South Korea**
Since 2017, the South Korean government has implemented several measures to regulate the virtual asset business. These measures include mandatory KYC (Know Your Customer) policies, anti-money laundering regulations, and the prohibition of ICOs (Initial Coin Offerings). However, the regulatory framework for virtual assets in the country remains incomplete. In March 2021, the South Korean government announced plans to impose a 20% tax on virtual asset trading profits starting in 2022.
**The Controversy Surrounding the Bank’s Authority to Investigate Virtual Asset Business**
The announcement that South Korean banks may have the authority to investigate virtual asset business has been met with mixed reactions. Supporters of the move believe that it is a necessary step towards increasing transparency and regulation in the virtual asset business. They argue that it will help to curb illegal activities such as money laundering and terrorist financing while ensuring investor protection.
However, opponents of the move have expressed concerns about privacy infringement. They believe that allowing banks to demand data from virtual asset operators and issuers will lead to a breach of privacy for both businesses and investors. Some experts in the field have also raised concerns that the move could stifle innovation in the virtual asset business.
**Conclusion**
The move by the Bank of Korea to clarify the Virtual Asset Law to allow banks to demand data from virtual asset operators and issuers is a significant step towards increasing transparency and regulation in the virtual asset business in South Korea. The move will play a key role in curbing illegal activities such as money laundering and terrorist financing while ensuring investor protection. However, concerns about privacy infringement and the stifling of innovation in the sector need to be addressed.
**FAQs**
1. What is the virtual asset business?
– The virtual asset business refers to the trading of virtual currencies, tokens, coins, and any other digital assets. The business involves the operating and issuing of these assets by virtual asset operators and issuers.
2. Why is the South Korean government concerned about the virtual asset business?
– The South Korean government is worried about the lack of transparency and regulation in the virtual asset business, which may facilitate illegal activities such as money laundering, terrorism financing, and other fraudulent activities.
3. What is the controversy surrounding banks’ authority to investigate virtual asset business?
– Some people believe that allowing banks to demand data from virtual asset operators and issuers will lead to a breach of privacy for both businesses and investors. Additionally, some experts have raised concerns that the move could stifle innovation in the virtual asset business.