The South Korean government has already made it clear that it will regulate cryptocurrency exchanges like banks, with stricter regulations. The recent Bithumb hack will speed up the process of implementing the country’s first cryptocurrency regulatory framework.
Regulating the crypto market in South Korea would have already been implemented, yet it’s government feard if they put regulation on cryptocurrency exchange it would give the mass an impression that they are legitimizing the market.
Currently, cryptocurrency exchanges are regulated as communicated vendors and with merely $30, anyone can launch a cryptocurrency trading platform in the country. Since digital asset exchanges are recognized as communication vendors, government agencies and financial authorities do not have direct authority over cryptocurrency exchanges and are not permitted to strictly oversee digital asset businesses.
The country local financial agencies Financial Intelligence Unit (KFIU) came to a consensus to properly regulate the cryptocurrency market with a primary focus of protecting investors and preventing large-scale hacking attacks.
“Under current regulations, there are clear limitations in preventing money laundering on crypto exchanges because the only way authorities can spot suspicious transactions is through banks. If the bill of lawmaker Jae Yoon-Kyung from the Democratic Party of Korea passes, local authorities will be able to impose identical regulations on crypto exchanges that are implemented on commercial banks,” a KFIU spokesperson said.
With the involvement of the KFIU and Financial Services Commission (FSC) privacy measures, security systems, and infrastructures will be drastically improved and exchanges will no longer be permitted to operate without meeting the standard industry security requirements that are also met by leading financial institutions.