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Financial Sector Urges South Korea to Police Crypto Exchanges

Tim Alper
Last updated: | 1 min read

A lack of governmental and legal support is exposing South Korean cryptocurrency exchanges – and the banks dealing with them – to considerable risk from money launderers and hackers, say financial experts in the country.

Source: iStock/mrtom-uk

The regulatory Financial Supervisory Commission held talks with country’s Ministry of Justice and the South Korean police over peer-to-peer (P2P) lending-related issues on June 25, with cryptocurrency exchange-policing also thought to have been on the agenda.

However, thus far, the only official policing the government has handed out to exchanges has been a set of guidelines that require exchanges to use real-name accounts for bank withdrawals. The guidelines, issued in January, only apply to customer accounts – and include no provisos for exchanges that handle customer banking requests via corporate accounts.

News agency Yonhap reports that that a bill put forward by MP Je Youn-kyung, of the ruling Democratic Party, which would require all exchanges to adopt information security management systems (ISMS) has been left “dangling” since it was proposed in March this year. The same outlet quotes a member of the National Assembly as saying the bill “has not yet even been debated.”

Yonhap also quotes an anonymous bank official official as saying, “[ISMS obligations] need to be implemented this year. The need is urgent if we want to build consensus in this industry.”

The agency additionally claims that exchanges are “rarely taking security measures that might prevent the risk of hacking.”

The recent hack on South Korean major exchange Bithumb has dealt a major blow to investor confidence, as reported. Media analysts and web users alike have concluded: “Only Upbit is left.” Upbit is Bithumb’s largest competitor and is yet to suffer a hacking attack.