CryptoUK Aims to Mitigate Market Security Threats After Bithumb’s Hack

United Kingdom Aims to Mitigate Threats to Market Security After Bithumb’s Hack

Bitcoin UK websites have assured MPs that customers’ cryptocurrencies are secure, after members of a parliamentary committee expressed concern following another attack on a crypto exchange.

The self-regulatory agency CryptoUK represents several websites where cryptocurrencies can be bought and sold, and announced that the exchanges had committed to storing at least 90% of their stocks offline so that hackers could not access them.

All this information came after one of the world's largest exchanges, the Korean Bithumb, lost more than £20 million (US$26.5 million) in cryptocurrencies in a cyber attack, the latest in a series of security breaches. The attack on Bithumb followed another Korean exchange, Coinrail, which was attacked some weeks ago.

Security is a particularly sensitive issue when it comes to cryptocurrencies. For example, a cyber attack on the Japanese exchange Mt Gox in 2013 was practically responsible for a price collapse that took years to recover from.

Recent attacks are believed to have been one of the reasons for the fall in the price of Bitcoin (BTC) and other digital currencies this year. BTC has plummeted in the last month and is currently being traded around $6,300 dollars; a third of the price from its all time high in December.

When asked about the recent attacks by MPs of the Treasury selection committee, Iqbal Gandham, chairman of CryptoUK, said the institution required that 90% of the cryptocurrencies be kept in so-called “cold storage“; meaning that they are stored offline and isolated from possible remote cyber attacks.

Security is improving,” he said. CryptoUK includes eToro's trading service, which Gandham manages, as well as Coinbase and Coinfloor, which organizes transactions for companies.

The agency was created in February 2018 in an attempt to improve standards within the world of cryptocurrencies, which has been accused of being a haven for criminals, terrorists, dictators, mobsters, drug traffickers and even money launderers. That same month, British MPs launched an investigation into digital currencies amid growing fears that the public might invest in them without understanding the risks. The Financial Conduct Authority is also examining the market.

Gandham suggested that regulatory uncertainty was leading banks to avoid online exchanges, forcing websites to work with less familiar foreign institutions.

He said: “99.9 percent (of exchanges) have bank accounts in remote jurisdictions and UK consumers are sending their money to high-risk jurisdictions.”

Responding to concerns that cryptocurrencies prices are too volatile, he said that prices are now fluctuating less than they used to, and insisted that over time they were less volatile than assets such as technology stocks.

Bithumb, one of the world's largest cryptocurrency exchanges, promised to compensate customers who had seen their stolen coins in the cyber attack. Meanwhile, North Korea has been seen as one of the possible perpetrators of attacks on South Korea's websites, using vast stores of cryptocurrencies as a way to evade international sanctions.

Bitcoin's price fell slightly after the attack, but later recovered, suggesting that the latest cyber-break had not undermined confidence in cryptocurrencies.

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