South Korea?s regulations on cryptocurrencies have been rather strict but the country?s government seems to be taking a softer stance on the matter with the recent regulatory changes aimed at aligning with G20 guidelines.
The move follows the recent requests at the G20 summit calling on unified regulations for the cryptocurrency industry. This has encouraged South Korean regulators namely the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) to revise their cryptocurrency exchange regulations. It has also been confirmed that the country?s government is open to the idea of digital currencies despite its strict policies aimed at discouraging the use of cryptocurrencies for illegal activities such as money laundering.
?Establishing unified rules is a complicated issue given the broader range of assessments between government agencies,? stated a government official.
The official continued to point out that international cooperation is good for South Korea especially since cryptocurrency regulations are still in their early stages. The country?s government has for the past few years been considering the introduction of regulations for digital currencies through practical policies to prevent instances of security breaches and hacks. However, regulations became more necessary with the rising cases of malicious hacks leading to the loss of cryptocurrencies.
Cryptocurrency theft has escalated especially this year with major exchanges such as Bithumb and Coinrail falling victim. Cryptocurrencies have also been gaining more popularity and thus the pressure on many countries to introduce guidelines on how digital assets and blockchain startups should be regulated.
According to a South Korean publication, the country?s government has decided to treat cryptocurrency exchanges as financial businesses that are regulated. It is also important to note that it would be difficult to regulate cryptocurrencies themselves due to their decentralized nature. It, therefore, makes sense to regulate the organizations which they are accessed.
The regulatory changes might cause a negative impact
Experts believe that the new regulatory framework may negatively affect investors and trading platforms because it will usher in stricter customer verification, Anti-Money Laundering, and Know Your Customer policies. However, the negative impact is only expected in the short-run.
Crypto exchanges such as Korbit, Coinone, and Bithumb will also be required to change up their internal management systems. they will also be required to employ better security measures.