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South Korea’s Watchdog Hurries Lawmakers Pass the Country’s First Cryptocurrency Bill

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by Sofiko Abeslamidze · 3 min read
South Korea’s Watchdog Hurries Lawmakers Pass the Country’s First Cryptocurrency Bill
Photo: Michael Howe-Ely / Flickr

Following a billions-worth heist of cryptocurrency exchanges, South Korea’s financial regulator urged lawmakers to pass the bill bringring exchanges under the FSC’s direct supervision.

Over a month ago, two largest cryptocurrency exchanges, operating in South Korea became victims of infamous hackers’ attacks. In addition to a damaged reputation and significant financial losses of some $70 million worth investments, the multiple hacks of Coinrail and Bithumb have triggered close attention of the county’s financial watchdog that has finally decided to give an end to security flaws and money-laundering risks thriving in the industry.

Earlier Coinspeaker reported members of South Korea’s political parties had been debating their respective bills for the legal status of digital currencies and the regulations for the local cryptocurrency exchanges during an extraordinary session of National Assembly that was finished yesterday. Despite all submitted drafts were pursuing a common goal of cyber security and transparency, proposed approaches largely divided. Therefore, until the last minute it was unclear whether the parties would reach consensus.

Notably that previously South Korea’s regulatory agency relaxed its guidelines for the cryptocurrency exchange operators in response to the G20 directives. As being pledged at the G20 summit, member nations were obliged to have “unified regulations” towards the functioning of digital currencies and South Korea whose regulatory framework was among the strictest was said to revise its cryptocurrency policy.

Nevertheless, a little slack does not take long. Today South Korea’s watchdog once again has turned to digital assets urging the approval of country’s first cryptocurrency bill. A lawmaker from South Korean ruling party introduced the first draft of the bill back in March, yet it has not been approved by the National Assembly.

However, in the wake of the security and money laundering risks courted by the world’s biggest turnover domestic cryptocurrency exchanges, the bill is likely to pass. The head of the virtual currency response team at South Korea’s Financial Services Commission, Hong Seong-ki commented:

“While crypto markets have seen rapid growth, such trading platforms don’t seem to be well-enough prepared in terms of security. We’re trying to legislate the most urgent and important things first, aiming for money-laundering prevention and investor protection. The bill should be passed as soon as possible.”

If passed in its current form, the bill would put crypto exchanges under the FSC’s direct supervision. Hong said he hopes the National Assembly will act by year-end, adding that the timing is hard to predict.

Hong who remains skeptical towards digital currencies also stressed that FSC oversight would not imply an official endorsement of cryptocurrency trading. In case the bill is passed, the regulator will focus on policing the exchanges rather than promoting their growth, he said.

Meanwhile, three Korean ministries are said to be working to produce the final draft of a new blockchain industry classification scheme by the end of the month. The draft could potentially redefine the status of crypto exchanges and recognize them as regulated financial institutions, as opposed to their previous classification as “communication vendors.”

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Sofiko Abeslamidze

Sofiko is a freelance fintech copywriter at Coinspeaker. With a Bachelor degree in International Business and Economics, Sofiko has been deepening her knowledge of an agile innovative industry primary focusing on the robust blockchain technology and cryptocurrencies. As a bank employee, Sofiko particularly keens on crypto and blockchain integration into the established banking systems.

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