South Korean Government to Unveil Regulatory Plan After Crypto Hacks
There have been multiple cryptocurrency exchange hacked during this year, one of them has been the Korean Bithumb, one of the most important in the market. This is one of the main reasons why the South Korean government decided to strengthen the regulatory framework around virtual currency exchanges.
New Korean Regulations
The South Korean government has decided to reveal some important details about regulations to the cryptocurrency market.
On June the 19th, the second most important crypto exchange in South Korea, Bithumb, suffered a hack of over $30 million dollars. Another important situation is related to the seventh largest exchange in Korea, known as Coinrail, which lost $40 million dollars on June the 10th.
The local news source Newsis, reported that Choi Jong-ku, Chairman of the Financial Services Commission (FSC), said:
“In order to prevent this [cryptocurrency exchange hacks], we need to make the [crypto] transaction system stable and strengthen the protections of the traders by virtual currency handling businesses.”
Moreover, an amendment bill to the Act on Reporting and Using Specified FInancial Transaction Information has been sent to the National Assembly in order to achieve this.
The main intention is to block illegal money laundering using virtual currencies and exchanges and enhance the rules for transactions with commercial banks. At the same time, Newspim wrote that the government will be monitoring cryptocurrency exchanges – which are currently ‘in the blind spot.’
In case the bill is approved by the National Assembly, cryptocurrency exchanges will be obliged ‘to report to the Financial Intelligence Unit (FIU) as a virtual currency handling business.’
At the same time, the proposed amendment obligates financial companies to preserve the financial transaction data for a period of five years.
Those companies that will not follow these rules may have to suspend business operations, receive corrective orders, recommend the dismissal of officers and more. Moreover, if the virtual currency provider does not go through the customer verification process or does not check or report suspicious transactions it will be fined with over $27,000 dollars.
Hong Sung-ki, Vice Director of Virtual Currency Countermeasures, reiterated that the bill “does not mean that virtual currency exchanges are legally recognized and absorbed into the system.”