In an effort to address the rise in crimes involving digital assets, South Korea plans to promote its non-official crypto investigating team to a department.

In response to the increase in fraud cases and crimes using cryptocurrencies, South Korea is acting pro-actively and is thinking of making its Joint Virtual Asset Crime Investigation Unit an official department. Early in May, the Ministry of Justice and the Ministry of the Interior and Security will hold talks about this change.

The unit, which is now functioning as a temporary organisation under the Seoul Southern District Prosecutor's Office, may be dissolved. The objective of the suggested promotion is to strengthen the unit's standing and improve its efficiency in operations.

With this reorganisation, it would be easier to assign fresh prosecutors and devoted financial resources, which are necessary to successfully address crimes involving digital assets.

The unit was formed in July 2023 and is made up of about thirty professionals who are from seven different financial and tax regulatory agencies.

Its promotion to an official department demonstrates South Korea's resolve to stop illegal activity in the cryptocurrency space and emphasises the increasing awareness of digital assets as a key area of interest for law enforcement.

An Increase in Criminal Activity Related to Cryptocurrencies South Korea's Regulatory Reaction

The government of South Korea has taken rapid regulatory action in response to a noticeable increase in criminal activity associated to cryptocurrencies. Local cryptocurrency companies reported 16,076 questionable transactions in 2023 alone—a 49% rise from the year before. To address these issues, South Korea is about to launch its first comprehensive crypto regulation on July 19.

This landmark regulation is designed to address various concerns, including market manipulation and investor protection.

Notably, the new regulatory framework imposes stricter criminal penalties for those found guilty of manipulating the crypto market, with certain offenses carrying the possibility of life sentences.

Crypto Policies Take Center Stage in South Korea’s Upcoming Parliamentary Election

As South Korea gears up for its upcoming parliamentary election, crypto-related policies have emerged as a pivotal issue shaping political discourse. With competing visions for the regulation of digital assets, major political parties are vying for the support of the electorate.

President Yoon Suk Yeol’s People Power Party has pledged to delay the implementation of a digital-asset tax, a move aimed at garnering support from the burgeoning crypto investor community.

In contrast, the opposition Democratic Party has promised to lift restrictions on exchange-traded funds (ETFs), including those linked to US Bitcoin products.

These divergent policy proposals reflect contrasting approaches to regulating digital assets and highlight the complex interplay between technological innovation and regulatory frameworks.