South Korea Unveils New Regulatory Guidelines for Cryptocurrency Exchanges
South Korea’s financial regulators are taking decisive steps to further legitimize the domestic cryptocurrency industry. On Thursday, the Financial Services Commission (FSC) unveiled new regulatory guidelines for cryptocurrency exchanges to further enhance safety in the wake of multiple cyber attacks earlier this month.
New Crypto Regulations
FSC officials are beefing up anti-money laundering (AML) and know-your-customer (KYC) guidelines for domestic cryptocurrency exchanges as part of a wider initiative to better monitor the domestic market. This also includes guidelines for Customer Due Diligence (CDD) and enhanced background checks. These criteria prevent foreigners from accessing domestic cryptocurrency exchanges and limit the ability of criminal networks to launder money.
Under the new guidelines, the FSC has requested the Korea Financial Intelligence Unit (KFIU) to oversee crypto transactions and user activity.
Three major banks – Nonghyup, Hana Bank, and Kookmin – are also under investigation for providing bank accounts to domestic exchanges. The extent of the investigation is not entirely clear.
The new guidelines are a significant departure from how cryptocurrency exchanges are presently regulated in the country. Prior to the new set of rules, domestic exchanges were regulated merely as “communication vendors,” which means virtually anyone can create an online trading platform for digital currencies.
Bithumb Retrieves $14 Million in Lost Cryptocurrency
Bithumb announced Thursday it had nearly halved the losses of a recent cyber attack that compromised roughly $31 million worth of cryptocurrency.
The exchange, one of South Korea’s largest in terms of trading volume, has retrieved some $14 million worth of stolen cryptocurrency, leaving roughly $17 million outstanding. According to a company post, the extent of the damage has been reduced after working with global exchanges to retrieve the stolen funds.
For the first time, the Seoul-based exchange released the list of cryptocurrencies affected by the breach. A total of 11 coins were compromised, with bitcoin accounting for nearly three-quarters of the stolen funds. Units of Ethereum, bitcoin cash, Ripple XRP and OmiseGo were also snatched up during the heist. It was Bithumb’s third confirmed cyber breach in a span of 12 months.
The attack on Bithumb hastened policymakers’ adoption of more comprehensive regulations. Shortly after the heist took place, the country’s financial regulators announced plans to implement stricter guidelines for digital currency exchanges.
Trading volumes on the exchange plummeted in the wake of the attack as Bithumb restricted users from depositing or withdrawing funds. Daily turnover on the exchange still hasn’t recovered from the attack; as of Monday, Bithumb was ranked ninth in the world by trading volume with daily turnover of $137 million.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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