South Korea’s Financial Services Commission has announced plans to ban executive employees and exchange operators from trading on their own platforms, prompting a chorus of complaints.
- The FSC’s Financial Intelligence Unit recently met with officials from cryptocurrency exchanges to explain upcoming amendments to the Act on Reporting and Use of Certain Financial Transaction Information, under which exchange operators and executives will be banned from trading virtual assets on their own exchanges, part of an effort to eliminate price manipulation.
- Failure to comply with the amended rules may result in penalties of up to US$89,656 and the cancellation of business licenses.
- According to news agency Newsis, exchange representatives have argued that a ban will block fund flows essential to the industry, because transaction fees charged on crypto trades are often collected in cryptocurrencies, and exchanges need to convert those cryptocurrencies into Korean won on their own platform. Exchanges claim the ban will make income from commissions illegal.
- Korean authorities have remained unmoved by such complaints, saying that regardless of the reason, cross-trading presents a conflict of interest, because bigger shareholders and business operators have far superior access to information than retail investors, and that it is therefore unfair to allow them to trade on their own platforms.