S Korean Exchanges In Regulation Race
With the South Korean government seemingly committed to introducing regulations pertaining to the country’s cryptocurrency exchanges, a number of leading platforms are looking to preempt Seoul by beefing up their financial and security networks before regulations come into place.
Seoul has been playing its cards close to its chest, but analysts have suggested that the regulatory Financial Supervisory Service (FSS) may eventually be charged with policing South Korean exchanges. Analysts believe that the FSS may initially focus on stamping out lax security, insufficient anti-money laundering measures, anonymous transactions and insider trading.
But it now appears that some exchanges are taking a proactive stance. Korbit, one of South Korea’s largest exchanges, has penned a deal with Shinhan Bank that will allow the exchange to keep customer funds completely separate from the exchanges’ holdings.
Media outlet Aju News quotes a senior executive at Korbit as saying, that the move will “help investors safely manage and trade their assets." The executive also stated that Korbit was attempting to make progress in the fight against money-laundering – another of Seoul’s major bugbears.
The move comes just days after the announcement that Korbit – along with rivals Upbit and Coinone – had successfully renewed its real-name account banking contract.
Korbit also recently announced it would begin using QRadar and the Akamai Web Firewall, security solutions that provide protection against Distributed Denial of Service (DDoS) attacks. Last month, both Korbit and recently established rival GoPax announced that they had obtained ISO 27001 information security standard accreditation.
A number of other leading South Korean exchanges are thought to be following suit, with new banking deals, anti-money laundering measures and security improvements currently in the pipelines.
Earlier this year, government officials spoke of a possible China-style crackdown, with a countrywide exchange closure mooted at one point. However, so far, the only Seoul-issued exchange governance policy has been the introduction of banking guidelines. Per the guidelines, banks should only permit authenticated, real-name KRW withdrawals from cryptocurrency exchange-linked accounts.
However, most exchanges do not use separate bank accounts to process corporate and client bank transactions – instead processing everything through their corporate accounts. The matter has been the source of great controversy in the country and the government had been expected to step in.