Korean cryptocurrency exchanges become the center of attention once again as major hacks that caused ripples in the world of cryptocurrency last month might happen again, owing to the lack of a regulatory framework.
Korean market of cryptocurrency is facing worst challenges in the form of stealing, money laundering and tax evasion due to the lack of a regulatory body for its exchanges nationwide.
Owing to the two hacks that happened last month, a shocking amount of approximately $32 million in crypto got stolen from Bithumb, world’s seventh largest cryptocurrency exchange by traded value. These attacks resulted in large stolen amounts of Bitcoin and Ether. As a result of these events, a serious cut off from the investors was seen, and consequently, both bitcoin and ether saw a serious price decline across the country.
These hacks have totally exposed the security inadequacies of the cryptocurrency exchanges present across the country, and have led all the major financial regulators to urge the lawmakers of the country to do something regarding the shortcomings of these exchanges. It is suggested to the lawmakers that, in the light of these hacks, there is a strong need for a proper framework to regulate the operations of these exchanges on an official level. There is a strong need for a cryptocurrency bill to be passed that provides a viable solution to the problems of stealing, money laundering, and such other security flaws.
Hong Seong-ki, the Head of the Virtual Currency Response team at South Korea’s Financial Services Commission, said in an interview to bloomberg:
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.
The demands for regulations to be implemented upon the cryptocurrency exchanges across Korea have been in circulations for a long time. The Financial Services Commission (FSC), on many occasions, has expressed its intent of implementing rigorous measures on the cryptocurrency space in order to avoid all the illegal activities, including stealing.
Related to implementation of regulations, the FSC published a document stating its intent of culminating all negative exploitation of the cryptocurrencies in Korea. FSC also stated in the document that the measures presented in the document were intended to:
…reduce room for cryptocurrency transactions to be exploited for illegal activities, such as crimes, money laundering and tax evasion.
Previously, a bill regarding the deployment of such a framework for the cryptocurrency exchanges across the country had already been proposed by a well-renowned lawmaker of Korea’s ruling party, but it is still on hold to be approved by the National Assembly of Korea.
If the bill concerning the need of a proper framework gets passed in the National Assembly, this will put all the cryptocurrency exchanges operating in Korea under the regulations of the FSC, and all the exchanges will be directly supervised by the commission.
Hong also suggested that the probability of this bill getting passed in the National Assembly is very high, but the exact timing of this event occurring is too hard to predict at this point in time.
Clarifying his stance regarding cryptocurrencies and its trading, Hong stated that although the bill proposes regulations to be implemented by the FSC, but this does not necessarily imply that the FSC actually endorses such activities relating to the world of cryptocurrencies. The major goal of this proposal is to only regulate the flow of events happening at the exchanges, not to support the growth of such elements. For anyone interested in entering the world of cryptocurrency, Hong had serious reservations regarding the decision and immediately discouraged anyone wanting to enter the world of cryptocurrency.
I wouldn’t recommend putting money in cryptocurrencies. Hong Seong-ki
Regarding the current situation of cryptocurrency exchanges, and the need for the development of regulatory frameworks by the government of Korea, Vijay Ayyar, the Singapore-based head of business development at Luno, a cryptocurrency exchange, stated:
How ill-prepared a lot of the exchanges still are across large markets. The overall market is seeing a lot of regulatory action and incidents like these will only hasten the process.
While South Korea plays one of the biggest factor in contributing to the world of cryptocurrencies, its lack of legal regulatory framework for the cryptocurrency exchanges is still, at large, the biggest problem for the nation. As we see vulnerability in the structure currently deployed across the country for cryptocurrencies, the future of the cryptocurrency market in Korea depends heavily on the implementation of a legal framework to avoid the problems related to stealing, money laundering etc.
In the backdrop of all this, it is the need of the hour for the Korean crypto market to have a regulatory framework installed in its structure in order to keep up with the security and transparency standards required across the cryptocurrency world. Otherwise, the future of the cryptocurrency market in Korea seems very blur.