South Korea Launches Crypto Crime Crackdown Unit

South Korea plans to upgrade its temporary crypto investigative unit to an official department to combat the rise in digital asset crimes.

South Korea is taking proactive steps to combat the rise in crypto-related crimes and fraud by proposing elevating its Joint Virtual Asset Crime Investigation Unit to an official department. 

The Ministry of Justice and the Ministry of Interior and Security plan to begin discussions about this transition in early May.

In addition, the unit is presently functioning as a provisional agency under the supervision of the Seoul Southern District Prosecutor’s Office. It is not immune to the prospect of dissolution. 

The proposed promotion aims to strengthen the unit’s standing and improve its efficiency in operations. 

Notably, implementing this reorganization would enable the efficient allocation of budgetary resources and the recruitment of fresh prosecutors, both of which are critical for effectively addressing digital asset offenses.

The unit was formed in July 2023 and comprises thirty specialists selected from seven financial and tax regulatory authorities. 

The designation of this division as an official department signifies South Korea’s dedication to addressing unlawful operations in the cryptocurrency sector. 

It emphasizes the increasing awareness of digital assets as a substantial subject of law enforcement attention.

Rising Crypto Crime Drives South Korean Regulation

The government of South Korea has taken prompt regulatory action in response to a significant acceleration in crypto-related criminal activities. 

However, local cryptocurrency companies documented a staggering 16,076 suspicious transactions in 2023 alone, representing a 49% rise from the previous year. 

Meanwhile, in response to these challenges, South Korea plans to enact its first comprehensive crypto regulation on July 19.

The primary objectives of this seminal regulation are to safeguard investors and prevent market manipulation, among other issues. 

Significantly, the newly established regulatory framework enforces more severe criminal sanctions on individuals convicted of manipulating the cryptocurrency market. 

Furthermore, certain offenses now bear the possibility of life imprisonment.

South Korea’s Parliamentary Election Focuses on Crypto Policies

In anticipation of the forthcoming parliamentary election in South Korea, policies surrounding cryptocurrencies have surfaced as a crucial topic influencing political dialogue. 

However, major political parties are contending for public support by presenting divergent perspectives on regulating digital assets. 

People Power Party candidate Yoon Suk Yeol has pledged to postpone the implementation of a tax on digital assets to gain the support of the rapidly expanding crypto investor community.

Moreover, the Democratic Party, on the other hand, has pledged to eliminate limitations on exchange-traded funds (ETFs), including those associated with Bitcoin products in the United States. 

These opposing policy proposals reflect different approaches to governing digital assets and emphasize the complicated relationship between technical innovation and regulatory frameworks.