South Korea’s top financial regulator has urged lawmakers to pass the country’s first crypto bill quickly, citing the urgent need from rising incidents at crypto exchanges. There are currently several crypto-related laws pending at the National Assembly.
Crypto Law Urgently Needed
South Korea’s top financial regulator, the Financial Services Commission (FSC), has urged lawmakers to “pass the country’s first cryptocurrency bill quickly,” Bloomberg reported this week. According to the agency, “Korea urgently needs crypto laws as thefts rise,” the publication conveyed, adding that “local exchanges are rife with security flaws and money laundering risks.”
Hong Seong-ki, head of the FSC virtual currency response team, said in an interview:
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 South Korean government first announced crypto regulation in the second half of last year. In September, initial coin offerings (ICOs) were banned. A crypto task force was established at that time “to improve the transparency of transactions and improve the legal system to protect consumers,” Joongang Daily described.
Since then, the FSC and other regulators have announced additional crypto regulatory measures including the real-name system and trading restrictions on minors and foreigners. However, “the problem is that these announcements have shaken the market but do not provide a proper legal framework for investor protection or market development,” the news outlet pointed out.
According to the publication, there are currently five crypto-related laws pending at the National Assembly.
Inadequate Security Measures
Hong was further quoted by Bloomberg claiming:
While crypto markets have seen rapid growth, such trading platforms don’t seem to be well-enough prepared in terms of security.
In June, two Korean crypto exchanges suffered security breaches. Coinrail was hacked on June 10 with an estimated damage of 45 billion won (~US$40 million). Bithumb, one of the largest crypto exchanges in the country, was hacked on June 20 with an estimated damage of about 19 billion won (~$17 million).
Putting FSC in Charge of Crypto Exchanges
Following the security breaches at Coinrail and Bithumb, the Korean government immediately launched an investigation into their causes.
The FSC subsequently pushed for a bill to require crypto exchanges to report to and be regularly supervised by the Financial Intelligence Unit (FIU), which is under its supervision. “This is the first time government agencies have said they will oversee virtual currency exchanges,” Maeil Business wrote.
Emphasizing that he personally “wouldn’t recommend putting money in cryptocurrencies,” Hong reiterated:
FSC oversight wouldn’t imply an official endorsement of crypto trading. If the bill is passed, the regulator will focus on policing the exchanges rather than promoting their growth.
Meanwhile, the commission itself is undergoing a major restructuring. A bureau dedicated to financial innovation including cryptocurrencies will be established for policy initiatives, the FSC recently announced.
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Images courtesy of Shutterstock and the FSC.
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