South Korean authorities have previously announced that they will regulate and monitor crypto exchanges on an equal basis with banks and tighten the requirements for them. Yesterday’s Bithumb hack will speed up the process of developing the first fully-fledged legal framework for crypto exchanges regulation in the country, CCN writes.
On June 11, after several months of discussions, the South Korean government and local financial regulators, including the Korea Financial Intelligence Unit (KFIU), came to the conclusion that it was necessary to properly regulate cryptocurrency market to protect investors and preventing large-scale hacker attacks.
“Under current regulations, there are clear limitations in preventing money laundering on crypto exchanges because the only way authorities can spot suspicious transactions is through banks. If the bill of lawmaker Jae Yoon-kyung from the Democratic Party of Korea passes, local authorities will be able to impose identical regulations on crypto exchanges that are implemented on commercial banks,” a KFIU representative said.
Now, cryptocurrency exchanges are regulated as service providers, and by paying only $ 30, everyone can launch their own cryptocurrency exchange. Cryptocurrency exchanges are recognized by the authorities as providers of communication services. At the same time, state institutions and financial bodies do not have the authority to directly regulate the exchange of the cryptocurrency and the turnover of digital assets.
According to the local resource Hani, officials are increasingly repeating the opinion of the deputy of the National Assembly Committee Park Yong-kin, who in late 2017 said that the government should not ignore the regulation of cryptocurrency exchanges since it blocks the development of the industry.
“We are frustrated as well. We fully understand that the government is reluctant towards regulating the cryptocurrency market because it will inevitably lead investors to consider it as the government’s way of legitimizing the market. But, if the government leaves the cryptocurrency market unregulated, it is simply leaving it vulnerable to variou issues,” said Park.
According to analysts, the authorities already intended to speed up the introduction of strict rules after CoinRail hack. Bithumb hack, which became unexpected for investors and authorities, will speed up the adoption of draft law on the crypto exchanges regulation.
Once this legislation has entered into force, crypto exchanges will need to work with local financial authorities and comply with safety standards if they want to continue working in South Korea. It is expected that the intervention of the Korea Financial Intelligence Unit and the Financial Services Commission will lead to significant improvements in the data processing, security and infrastructure of crypto exchanges.