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“Know-the-sender” rule sparks debate in South Korea

The controversial regulating rule levied by the government of South Korea is sparking a heated debate among crypto-heads.

The ‘Know-the-sender’ rule, abbreviated as KTS, requires greater analysis of the digital asset transaction for businesses. And the Korean lawmakers believe that this will only pose an obstacle in the innovation of the crypto space.

The rule embarks businesses that dabble in digital currencies to verify the sender’s identity and location. And report the data to the Financial Services Commission (FSC), the Korean financial watchdog.

Moreover, the recipient of the crypto transaction is obligated to report the sender’s legal status with the number of its employees, a local newspaper reports.

Kim Byung-Wook and Yoon Chang-Hyeon of the ruling Democratic Party and the People’s Power Party, respectively; proposed the bill in their parliament.

The Korean National Assembly greeted the bill with a heated debate. Some Lawmakers and blockchain industry experts hosted their arguments against the bill becoming law before the Assembly.

Financial Supervisory Services’ Choi Hwa-in pointed out that the law could put a small lens over the young local blockchain industry. However, Yoon Jong-soo, an attorney, countered this by saying that with the surge in interest in the currencies, the verification of the senders’ identity will become difficult and expensive, also having the businesses at extra costs.

Furthermore, the proposed bill extends beyond reporting regimes for businesses to vary how digital currency users based outside Korea interact with local businesses. The users have to register themselves with the local regulator, this would be difficult and quite costly to enforce. Further, it could effectively shut Korea out of the world’s digital currency ecosystem.

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