Cryptocurrency rules in South Korea is often a topic of concern – According to the recent report, South Korean cryptocurrency exchanges are announcing new self- regulatory rules and will have self-inspection as well.
To regulate self-trading effectively, industry group charge address 23 cryptocurrency exchange and clarified the difference between new and old self-regulatory rules. As per the Korean Blockchain Association(KBA) which is in an effort to make the trading process transparent has clearly stated its self-regulatory rules.
Sources unveil that the inspections will begin from May 1. The KBA will have closer view n exchanges’ systems. Additionally, the association will “to check if there are loopholes that could be used for insider trading, price rigging and money laundering,”. With this, members are expected to submit self-inspection reports to the association by May 8”.
“The association will inspect the system of the 14 exchanges and nine newcomers to see if their systems meet the rules. But the inspection could have a limited impact because the rules are not legally binding.”
Jeon Ha-jin, Chairman of the KBA committee discusses the exchange’s involvement in implementing the self-regulation. During an interview with Asia Economic TV, he said
The role and responsibility of the blockchain association will be significant until a safe and sound cryptocurrency trading culture is formed.
In a mid-April 2018, the KBA executive Jeon Ha-jin announced self-regulatory frameworks at the press conference at the Korea Federation of Small and Medium Business (SME) in Seul. The frameworks intended to increase operational transparency of the cryptocurrency exchange.
Such framework counts five requirements including
1) Manage clients’ digital coins separately from their own
2) Managing abnormal and liquid transactions quickly
3) NEw crypto listing with advanced client protection system
4) minimum equity holding of 2bln won (Us$ 1.85million)
5) publishing audit report and financial reports.
Moreover, these frameworks aim to prevent money laundering, illegal activities, and insider trading.
Difference between Old and New Rules
Mr.Jeon clarified the difference between the Old and New Rules, he believes small and medium-sized exchanges are no longer getting exposure by Government with the enforcement of the real-name system. The real name system which was implemented on Jan 30, 2018, by six banks including Nonghyup Bank and Shinhan Bank to rein the trading of virtual currencies making it difficult for medium-sized exchanges to avail the virtual currency trading service. Moreover, there are fewer regulations to largest trading platforms such as Bithumb, Coinone, Korbit, and Upbit.
Taking into consideration of small and medium-sized exchanges and their issue due to an implementation of the real-time system, Jeon described new self-regulation and added,
In the new self-regulation, the content of strengthening the transparency and security of cryptocurrency exchanges has been added. In order to prevent money laundering by the users of the exchanges, we have added a procedure to verify identity.
He also confirmed that the “trading with only one account per person will be enforced from the coming year”. This intends to preserve transparency and prevent money laundering by keeping transaction records for five years.
Jong concluded the talk to impose an insurance policy on the capital adequacy
Considering the size of the cryptocurrency market, it is necessary to impose a null and void liability in the event of damages caused by hacking or the like. It is desirable to impose an insurance policy on capital adequacy through appropriate capital requirements.
When the association first initiated self -regulatory process, the crypto market appeared relatively sanguine – Let’s analyze how would this announcement creates an impact.
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