Bank of Korea to Monitor Crypto Transactions Using Financial Records
South Korea’s monetary policy regulator, Bank of Korea, plans to obtain documents from financial institutions to track crypto transactions involving bank accounts. Cryptocurrency prices fluctuate independently from the real economy, the bank says, adding that market growth could pose a risk to the country’s financial system.
South Korean Central Bank to Intensify Screening of Crypto-Related Bank Records
The central bank of South Korea intends to exercise its powers to conduct monitoring of crypto transactions through real-name bank accounts, according to a paper sent to an opposition lawmaker in Seoul. In the correspondence with Choo Kyung-ho from the People Power Party, the regulator turns attention to Article 87 of the Bank of Korea Act and states:
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.
By law, the Bank of Korea (BOK) is authorized to acquire records and various other materials from financial institutions when the Monetary Policy Committee considers it necessary for the implementation of its monetary and credit policies.
The bank’s statements suggest that it’s recognizing certain developments in the crypto space as potential threats for these policies, the Korean Herald reported in an article.
Bank of Korea Worried by Crypto Price Volatility and Rapid Market Growth
South Korea’s central bank is concerned about both the volatile nature of cryptocurrency prices and the rapid expansion of the digital assets market. In April, the Korean price of the leading cryptocurrency by market capitalization, BTC, reached a record high, trading around $72,000 per coin. Cryptocurrencies have gained significant popularity in East Asia and Koreans have a plethora of choices when it comes to trading platforms and investment opportunities. On this backdrop, BOK now warns:
The market has been growing at a fast pace and this could negatively affect the stability of the financial system.
In the document sent to Rep. Choo Kyung-ho, the regulatory authority also notes that “Cryptocurrency has high price volatility and is a high-risk asset that shifts on issues irrelevant with the real economy.”
Crypto markets in South Korea and elsewhere were just recently hit by Elon Musk’s announcement that Tesla will no longer accept bitcoin. The CEO of the U.S. electric car manufacturer justified the decision with concerns over the increasing use of fossil fuels for cryptocurrency mining.
Other government agencies have already taken steps to increase the monitoring of crypto-related activities in South Korea. The Financial Intelligence Unit has been tracking illegal money flows in the sector and the Financial Services Commission is now requiring financial institutions and digital asset exchanges to intensify the screening of cryptocurrency transactions.
Furthermore, crypto trading platforms will be required to submit receipts to the country’s tax authorities starting next year.