South Korean Cryptocurrency Exchanges on the Verge of Self Regulation
After months of heightened FUD in the entire crypto ecosystem, the market is gradually picking up speed as a vast array of nations has started creating proper regulatory frameworks for the blockchain-based digital assets industry.
The Korean Blockchain Association, a reputable body in the South Korean cryptocurrency space, has proposed a self-regulatory system that would greatly ‘sanitize’ the virtual currency exchanges, and Initial Coin Offerings (ICOs).
In Search of Excellence
According to local news outlet Yonhap, the Korean Blockchain Association has proposed a regulatory framework that would make it compulsory for cryptocurrency exchanges to have at least two billion South Korean won ($1.8 million) in equity capital. Additionally, all exchanges are required to present their financial statements and audit reports to the association.
As reported by CNBC, the body first announced measures for improvement of the local virtual currency space in December 2017. Back then, a total of 14 exchanges including Bithumb agreed with the body’s directive to make sure their clients traded cryptocurrencies with only one account and their identities must be verified through legacy financial institutions like banks.
Also, the statement made it clear that exchanges that do not have up to two billion South Korean won in assets, will not be allowed to do business in the area.
User Data Must be Stored
The association initially said in 2017 that the new rules would take effect from January 1, 2018, however, it remains unclear what has delayed the proposal up to now.
With these latest guidelines, exchanges are mandated to keep all transaction records of users for a minimum of five years, they must always be on the lookout for suspicious transactions and promptly report their findings.
According to Yonhap, these measures conform with the directives of the nation’s Financial Services Commission (FSC), in a bid to fight against money laundering and illicit activities in the South Korean cryptosphere.
“We will establish the order of the domestically cryptographic [exchange] market through self-regulatory review. By providing a safeguard for the protection of users, we will contribute to ensuring asset safety,” said the chairman of the organization, Jeon Jae-jin.
Self Regulation is Essential
Various South Korean exchanges present at the Deconomy Conference 2018 vowed to join forces to ‘detoxify’ the local virtual currency space.
“We need to create a healthy market first. If exchanges can’t do that on our own, we will have to turn to the government,” said the CEO of Korbit, Tony Lyu, at the conference.
Amidst that backdrop, exchanges are required to create special committees that will properly review the listing of ICO tokens, while also formulating ethical charters to prevent insider trading.
The end of May will see further review of these latest guidelines, and all exchanges will submit the essential documents by June 8, 2018.
No More FUD
With this latest event, all debates concerning how to regulate the South Korean cryptocurrency ecosystem optimally has come to a fruitful end. There’s now a consensus, and the country’s blockchain industry will experience peace once again after a turbulent period of fear, uncertainty, and doubt.
The author firmly believes that this new development could send the price of bitcoin and the altcoins to the moon once again in the coming months.