South Korea has announced tougher crypto regulations in a bid to reduce the increasing rate of fraud in the crypto sector. The new law will be introduced on March 25 and has proposed a 5-year jail term for anyone or company who fails to report crypto transactions.
The amended rule stipulates that all crypto businesses are mandated to file records of their transactions with the country’s Financial Intelligence Unit.
Startups have been given six months to comply with the new law. Apart from the five-year jail term proposed, those who failed to comply may likely pay a fine of $44,000.
South Korea’s Financial Services Commission (FCC) has been very critical of the crypto industry due to the propensity of fraud cases. The new regulation has already been exercised, as shown earlier this week.
South Korea’s National Tax Service revealed that it had identified more than 2,400 individuals who are using crypto assets to hide their assets are evade taxes.
Banks now have the opportunity to join the industry
The proposed crypto tax rule will be effective from January 2022, and there is a 20% tax placed on Bitcoin and cryptocurrency profits.
The banking sector has been skeptical about the crypto and DeFi industry, but the new rules will give them more reasons to join the industry.
Last year, members of the banking industry in the country reiterated their desire to help in the implementation of the new law. According to them, the regulation will enable them to take part in the booming decentralized finance (DeFi) industry and present their financial instruments to the public.
Korean crypto community optimistic about the new rule
Some members of the crypto community in the country are also optimistic about the new regulation. They stated that crypto holders have been finding it a bit difficult to measure and pay their taxes. But with the new laws and platforms put in place, this may no longer be an issue.
Some banks have already started launching their products in preparation for the take-off of the new rule. One bank has already rolled out a blockchain-based app that will enable payment and custodial services for clients.
Crypto firms need to report any suspicious transactions
However, there is still more work to be done before the regulator achieves success in the compliance rate. All digital service providers need to follow strict regulatory protocols. Wallet providers, exchanges, and other crypto businesses have the responsibility of reporting any suspicious transactions or pay heavy penalties for not doing so, according to the regulator.