South Korea officially recognizes cryptocurrency exchanges as financial institutions

South Korea officially recognizes cryptocurrency exchanges as financial institutions

Following the actions of the parliament and the government of Japan, the authorities of neighboring South Korea also announced the legal regulation of cryptocurrencies.

For the first time in history, the government of South Korea officially recognized cryptocurrency exchanges as regulated financial institutions in the same way as banks.

Local reporters in South Korea have reported that the financial authorities of South Korea have finalized their plans to classify cryptographic exchanges as an industry called "Cryptocurrency Exchange and Brokerage" to allow trading platforms to operate on a large scale with the support of local authorities.

For many years, the South Korean government has been considering regulating the cryptocurrency sector with clear regulations, primarily to prevent large-scale hacking attacks and security breaches, as demonstrated by Bithumb and Coinrail in early 2018.

This week, local press revealed that the South Korean government has reached an agreement on the recognition of crypto exchanges as regulated financial enterprises, creating a new sector dedicated to cryptocurrency trading platforms.

In the short term, the newly created laws may have a negative impact on both, transaction platforms and investors, because it would mean more stringent requirements (KYC) and (AML), that is, accurate customer verification and anti-money laundering.

However, in the long run, analysts said that the government's decision to legitimize the cryptocurrency sector would lead to the entry of large institutional investors and retailers, allowing digital currencies to be considered as a category of assets.

The South Korean authorities will also amend existing regulations to facilitate the development of platforms which allow you to create decentralized applications (Ethereum and EOS).