The Korea Financial Services Commission (FSC) will impose a fine of 100 million won (around $89,844) on exchange employees caught trading on the platforms they work for. As of now, there are no laws that prohibit executives and employees of exchanges from trading crypto on their own platforms.
According to the FSC, officials from the Korea Financial Intelligence Unit (FIU), which operates under the FSC, met with the heads of Korea’s major crypto exchanges on June 3 to inform them of the updated decree.
South Korea’s updated Financial Transactions Reports Act (FTRA) requires all crypto exchanges to register with the FIU by Sept. 24, 2021. Registration isn’t a simple filing process however. Exchanges must meet stringent conditions to have their registration approved. These conditions include acquiring partnerships with commercial banks and having their anti-money laundering (AML) and know-your-customer (KYC) systems approved.
Any exchanges that aren’t approved by the deadline will be shut down. The FIU has also stated that registered exchanges whose executives or employees are caught trading on their own platforms after the September deadline will have their registration status revoked.
Korea’s major exchanges have actually established company policies that restrict employee trading, but many of them will be rendered mute by the FIU’s new restrictions.
Upbit, one of the world’s largest exchanges by volume, currently allows employees to trade on its own platform, but they’re prohibited from touching any cryptocurrency that’s not bitcoin (BTC), ether (ETH) or tether (USDT). All company employees are prohibited from purchasing or trading anything beyond these three cryptocurrencies, regardless of which platform they use.
Additionally, Upbit employees are required to report how much crypto they own and how much they profit from each trade. There is also an annual limit on how much they can trade, but this limit has not been publicized.
Bithumb, another major South Korean player, allows employees to purchase and trade new cryptocurrencies only within 72 hours after they’re listed on the exchange. It also prohibits trading during work hours. Bithumb also requires all employees to sign a statement saying they will not use company information and data for personal trading profits.
Should this ban be implemented, these exchange employees would still be able to trade crypto, but only on other platforms, not their employers’.