The South Korean Ministry of Justice and Ministry of Security and Public Administration are working to elevate their crypto crime investigative unit to the status of a permanent department, according to a local press report.
Issues such as budget allocation and the appointment of prosecutors will be discussed early next month, Segye Ilbo reported. The prosecutors in the current unit are associated with the Seoul Southern District Prosecutors’ Office. The unit currently has temporary status, which means that it could be dissolved at the government’s will.
The investigative unit was formed in July and has about 30 expert members. It coordinates the activities of seven government agencies, including the Prosecutor’s Office, Financial Supervisory Service, Financial Intelligence Unit (FIU) and National Tax Service.
Related: South Korean regulator outlines steps to enhance digital asset legislation
A permanent department would interact with domestic and international government agencies on an equal footing and could expect to see an increasing caseload after the Virtual Asset User Protection Act comes into effect on July 19. That act foresees penalties of up to life imprisonment for crypto-related crimes involving more than 5 billion won ($3.6 million).
Enforcement actions against virtual-asset related crimes is already on the upswing. There were 16,076 suspicious transactions reported in 2023, a 48.8% increase year-on-year, and reports to law enforcement of suspected crypto-related crimes rose 90%.
South Korea is implementing a variety of measures to impose order on the country’s cryptocurrency market. This year, it has tightened rules for token listing on local exchanges and announced plans to increase scrutiny over exchanges and shut down those that do not meet specifications recommended by the Financial Action Task Force.
Crypto has also become a political issue in South Korea. Major parties are promising to ease restrictions in the runup to this year’s parliamentary elections. Upon taking office in 2022, President Yoon Suk Yeol's administration delayed a 20% tax on crypto capital gains, slated to take effect in 2023 to 2025, while greater effort is being given to collecting taxes on crypto.
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