Korean Blockchain Industry Association Announces Self-Regulatory Measures
Just one day after the South Korean government released an emergency regulatory framework to govern cryptocurrency and Bitcoin in the country, industry Association is stepping in to implement a self-regulation. According to a press conference held in Seoul on Friday, the regulation will be majorly targeting Cryptocurrency exchanges across the country.
The Korean Blockchain Industry Association, the body that brings all cryptocurrency operators in South Korea under one umbrella had over 40-member companies. Among them are 14 Bitcoin exchanges including the top three Bitcoin exchanges in the country- Bithumb, coinone, and Korbit according to a report by the native newspaper the Korea Times.
The Blockchain Industry Association revealed that 14 cryptocurrency exchanges in South Korea agreed to implement plans to help protect investors assets. Another aim would be to make the process of listing new cryptocurrency process more transparent.
The drafting of the self-regulation was first heard of in September at the recommendation of the virtual currency Task Force put up by the government. One of the leaders of the association, Kim Jin-Hwa commented on the development saying, they would cooperate with government plans for a safer cryptocurrency trading in South Korea via the voluntary regulation approaches. The self-regulation measures are to be put in place starting early January 2018.
As a policy, deposits made in the local fiat currency, the South Korean Won, will be fully kept by Financial Institutions. To increase trader’s protection 70% of all cryptocurrency holdings are not to be stored online but kept in an offline cold storage system. This according to Kim will ignorantly reduce the risks of losing money through attacks from hackers.
Kim further added that only one cryptocurrency account would be permitted per person. Facial identification verification techniques will be used in order to make any deposits or withdrawal.
Banks Creates a User Verification System
Following the emergency measures put up by the government recently virtual bank accounts are to be removed. Virtual Bank accounts play a vital role in cryptocurrency trading. With the current regulatory bottlenecks, some cryptocurrency exchanges will be kicked out of business. Recently regulators asked banks to disclose the identities of people behind virtual accounts through the banks claim never held such records. The virtual accounts, according to the banks are issued to cryptocurrency exchanges, not to individual users.
At the moment financial institutions are cooperating with the Korean Blockchain Association to develop a mutual compliance with the regulation. Banks are now pooling resources towards identifying virtual account customers. Nonghyup Bank, KB Kookmin Bank, IBK Bank, KEB Hana Bank, Shinhan Bank and Kwangju Bank has revealed their plans to work together to identify virtual accounts customers.
Later banks can now share customer information with Cryptocurrency exchange operators. Matching records held by both the bank and the exchange will help in pointing out virtual accounts.
Association Imposed Requirements for Cryptocurrency Exchanges across South Korea
The association has put in place a requirement on every cryptocurrency exchanges in the country that is to come to service by 1st Jan of 2018. Kim was quoted saying,
“The new requirement to operate a virtual currency exchange will be limited to a place with more than 2 billion won (about $1.83 million) of equity capital. Further requirements include abilities to implement information security system, internal processes, and certifiable information expertise”
The association is to suspend the listing of any new cryptocurrency for the time being. However, exchanges can refute this rule as the association is just a private organization. The association vows to dismiss any exchange that does not abide by its rule from the association. A committee that will offer legal advice to investors was agreed by the association members to be put in place.