South Korea Urgently Needs Crypto Regulation, Says Financial Regulator

News, Regulation | July 27, 2018 By:

South Korea’s Financial Services Commission (FSC) has urged politicians to pass the country’s first cryptocurrency bill quicly in order to prevent money laundering and increase investor protection.

In an interview with Bloomberg, Hong Seong-ki, head of the FSC’s virtual currency response team, has warned that local exchanges are “rife with security flaws and money-laundering risks.”

“While crypto markets have seen rapid growth, such trading platforms don’t seem to be well-enough prepared in terms of security,” Hong said.

In March of this year, Korea’s ruling party introduced a draft bill that would bring crypto exchanges under the direct supervision of the FSC. But Hong said the bill still requires approval from the National Assembly, adding that it will most likely be approved by the end of the year.

“We’re trying to legislate the most urgent and important things first, aiming for money-laundering prevention (AML) and investor protection,” Hong said. “The bill should be passed as soon as possible.”

South Korea, one of the biggest crypto markets in the world by daily turnover, has attracted increased scrunity after two local crypto exchanges were hacked last month. On June 9, crypto exchange Coinrail lost around $40 million to hackers, including 1,927 ether, 2.6 billion NPXS, 93 million ATX and 831 million DENT coins. Less than two weeks later, Bithumb announced that hackers stole 35 billion won ($31M USD) from the platform.

If the bill is passed, Hong said it would allow the FSC to “police” exchanges’ operations effectively, rather than in any way “promote their growth.”