South Korea: Regulation on Crypto Exchanges Becomes “Urgent”by Jean-Armand Figeac July 31, 2018
After several hacks for the past few months and an audit from the Korean Blockchain Association (KBA) conducted at the beginning of July, the Korean Financial Services Commission urges local legislators to intervene as soon as possible.
“Exchanges are not enough prepared”
Cryptocurrency in Korea is by far one of the hottest topics in regards to Blockchain in this part of the globe. As previously covered, the Mayor of Seoul, Park Won-Soon, pledged his support for Blockchain development while being committed to helping the city in order to make it the center for Blockchain incubation. Additionally Ethereum creator, Vitalik Buterin visited Seoul few months ago to emphasize the need for a more proactive stance on cryptocurrency regulation.
When putting things into perspective, we may understand Buterin’s involvement in South Korea. Indeed, at the beginning of summer, Coinrail, a South Korean platform has been unfortunately hacked in which approximately $ 40 millions worth of cryptos vanished. Several hours later, not only bitcoin but the whole cryptocurrency market cap as well plunged.
Few days after, South Korean watchdogs Korea Communications Commission (KCC) and the Korea Internet & Security Agency (KISA) highlighted the potential infringements of data privacy rights by crypto exchange operators; not less than eight platforms seem to have violated Korea’s Personal Information Protection Act in 2017.
The following week, local exchanges were still facing a complex situation as the Korean Blockchain Association concluded that although a vast majority met the general standards, those standards do not guarantee the absolute safety of the audited exchanges. The exchanges referred to were namely: OKCoin Korea, Coinone, Gopax, Hanbitco, Huobi Korea, Bithumb, Cpdax, Coinzest, Korbit, Dexko, Upbit and Neoframe.
These events cannot remain without any consequences for financial regulators but these latter are not able to change anything if the guidelines and instructions don’t come from legislators themselves. This is exactly what the department director of Virtual Currency of the Financial Services Commission (FSC), Hong Seong-ki, tries to pinpoint during an interview with Bloomberg. Seong-ki stipulates:
“While crypto markets have seen rapid growth, such trading platforms don’t seem to be well-enough prepared in terms of security. We’re trying to legislate the most urgent and important things first, aiming for money-laundering prevention and investor protection. The bill should be passed as soon as possible.”
Revision of the Electronic Financial Transactions Act
Along those lines, a member of the country’s ruling Democratic Party, Park Yong-jin, submitted the requests to the National Assembly on the beginning of July while the first proposal was sent few months ago already.
Among the bills requested, let’s note the revision of the Electronic Financial Transactions Act which was firstly introduced during the mid 2000s but as well the modifications of income and corporate tax laws in order to enable the government to fight against tax evasion conducted through crypto transactions. Another bill submitted to the National Assembly had the goal of bringing the whole crypto trading sector under the scrutiny and supervision of the local government.
A vast majority of these bills were supported by an important number of politicians. Those politicians are seeking clear guidelines and regulatory framework regarding this booming sector which still remain largely uncleared. If those projects and milestones are eventually accomplished, South Korea will position itself as Japan; indeed, Japan has recently become one the most crypto market place regulated in the word.
Featured Image via Freepik