South Korea Enhances Crypto Crime Control with Specialized Department

As South Korea grapples with a surge in crypto-related crimes and fraud, the nation is taking decisive steps to enhance its regulatory framework. The Joint Virtual Asset Crime Investigation Unit, currently a temporary agency under the Seoul Southern District Prosecutor’s Office, is set to undergo significant changes. The Ministry of Justice and the Ministry of the Interior and Security are initiating discussions to elevate the unit to an official department, a move aimed at bolstering its operational capabilities and ensuring its permanence.

The unit, established in July 2023, plays a crucial role in the Korean government’s strategy to combat the increasing incidents of digital asset crimes. Comprising about 30 experts from various financial and tax regulatory bodies, its upgrade will allow for the appointment of additional prosecutors and ensure dedicated budgetary allocations. This restructuring is essential for the unit to tackle the complexities of crypto-related offenses more effectively.

The urgency of these reforms is underscored by the dramatic rise in crypto-related criminal activities in South Korea. In 2023, the local crypto industry reported an alarming 16,076 suspicious transactions, a 49% increase from the previous year. Such statistics highlight the critical need for robust regulatory measures to safeguard investors and maintain market integrity.

On July 19, South Korea will implement its first comprehensive crypto regulation, addressing key issues like market manipulation and investor protection. The new law will introduce harsher penalties for crypto market manipulation, including life imprisonment in severe cases. This regulatory milestone is part of South Korea’s broader effort to establish a secure and transparent crypto market environment.

Crypto policies are also becoming a central theme in South Korea’s political landscape, especially as the country approaches its parliamentary election. The ruling People Power Party, led by President Yoon Suk Yeol, has proposed delaying the implementation of a digital-asset tax to appeal to the growing crypto investor base. Meanwhile, the opposition Democratic Party is advocating for fewer restrictions on exchange-traded funds (ETFs), including those linked to US Bitcoin products. These policy proposals reflect the diverse approaches to crypto regulation and their significant implications for the nation’s technological and economic landscape.

The evolving scenario in South Korea illustrates the complex interplay between technological advancement, regulatory challenges, and political strategies. As the country continues to refine its approach to managing digital assets, these developments are set to shape the future of the crypto industry both domestically and globally.

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