South Korea has issued a proposal to demand Bitcoin and crypto exchange companies to officially separate customers’ crypto assets and deposits, reports from Bitcoin Archive. The announcement was issued on Tuesday, 22nd November. South Korea’s regulation of cryptocurrency and respective crypto firms aims to continually facilitate customers’ security and safety in the crypto industry.
South Korea’s regulations on crypto exchanges and assets
South Korea is a global powerhouse in the cryptocurrency industry despite its modest size. The country’s high affinity to cryptocurrency and digital assets can be seen in its passion for technology and state-of-the-art innovations.
About 30% of all cryptocurrency trades worldwide are conducted in South Korea, with the country’s financial sector generating headlines for its enthusiasm for blockchain.
Because of its innovative passion for cryptocurrencies and blockchain technology, South Korea has prioritized its residents’ safety above all else. The country has constantly enacted regulations and policies to govern cryptocurrency services and firms.
The country plans to enact a system where consumers deposits are maintained apart from an exchange’s assets. Exchanges have been requested to self-regulate by current standards, which already state this should be the case.
Furthermore, the FSC and other authorities would have the power to examine and monitor how exchanges handle their clients’ assets under the proposed plans, effectively codifying current regulations into law.
In an effort to further facilitate safe cryptocurrency services, South Korea will also be supporting a lawmaker’s plan to prevent cryptocurrency exchanges from arbitrarily blocking client payments and withdrawals.
The proposed law would allow financial authorities to prohibit any exchange’s decision to refuse a withdrawal request. Additionally, it suggests imposing fines of up to $74,000 on declinatory exchanges.
South Korea’s ratified guidelines for xrypto exchanges
On Tuesday, 23rd of January 2018, South Korea officially published two regulatory guidelines for cryptocurrency exchanges. This is according to Kim Yong-bum, the Vice Chairman of FSC.
The document also displayed guidelines prepared by the Financial Intelligence Unit in Korea (FIU) on anti-money laundering (AML) regulations for any bank operating using cryptocurrency accounts.
The regulatory guidelines were upheld by crypto exchanges and confirmed by the Financial Supervisory Service (FSS) and the FIU after executing a thorough investigation on all the South Korean banks dealing with crypto accounts.
However, government investigations disclosed that some exchanges amassed reserves from customers’ assets through public, corporate accounts at banks. It was revealed that most exchanges do not separate their assets from users’ deposits.
South Korea prepares to overcome this oversight with its recent proposal to issue a mandatory separation of consumer funds from exchange assets.