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The Bank of Korea is planning to gain the authority to closely monitor crypto transactions via real-name bank accounts. The monetary authority is concerned that the crypto market’s explosive growth might negatively affect the stability of the country’s financial system.
“We plan to utilize our legal authority over requesting document submittal from financial institutions to monitor the volume of cryptocurrency transactions made through bank accounts,” wrote to lawmakers, according to The Korea Herald. The document submitted to the main opposition People Power Party’s to Rep. Choo Kyung-ho on Wednesday.
The move was made under Article 87 of the Bank of Korea Act which allows the central bank to request materials from financial institutions “when the monetary policy committee deems it necessary for the implementation of its monetary and credit policies.” This means that the BOK is concerned that unlawful crypto transactions could pose significant risks to monetary policies.
Monetary authorities in the country would gain stronger monitoring powers once lawmakers grant the BOK the authority it seeks. A BOK official said that, if it gains approval from lawmakers, the central bank could start its strict oversight on crypto trading by September 2021, according to Cointelegraph.
The Financial Services Commission and the state-run Financial Intelligence Unit are already closely monitoring the crypto market. As part of its control procedures, FSC employees are now required to declare their crypto holdings. It also required banks and crypto exchanges to beef up their screening procedures of crypto transactions
Virtual asset providers in the country such as custodians, wallet platforms, exchanges, and asset managers have to comply with new reporting requirements by September. Executives of companies that fail to do so could face jail terms of up to five years.
“Cryptocurrency has high price volatility and is a high-risk asset that shifts on issues irrelevant with the real economy,” the Bank of Korea explained. “The market has been growing at a fast pace and this could negatively affect the stability of the financial system.”
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