Korean Bitcoin Association (KBA) Clears 12 Exchanges After Examination
As the influence of cryptocurrencies broadens, regulatory bodies have sprung up in multiple countries across the globe to check the activities and use of digital assets.
At the start of the year, cryptocurrencies were faced with stiff resistance from regulatory bodies in most Asian Countries. China and Korea, two of the largest markets, look to overcome these hurdles.
On a positive note, the Korean Bitcoin Association (KBA) cleared all 12 exchanges during their self-imposed security review.
KBA clears 12 exchanges after security inspection
The Korean Bitcoin Association (KBA) gave a confirmation to the cybersecurity standards of the country to clear 12 cryptocurrency exchanges in Korea on Wednesday, July 11, 2018.
It can be recalled that two months back the association launched a self-regulatory inspection of cryptocurrency exchange platforms operating in the country. This comes after the recent Bithump hack, a leading Korean exchange.
Initially, the inspection began with 14 exchange platforms. The 12 platforms cleared by the inspections carried out by the KBA are:
- OKCoin Korea
- Huobi Korea
- Neo frame
- Korbit and
The other two exchange platforms, Sunny7 and Komid withdrew from the KBA led inspections before the announcement was made.
The inspection carried out by the Korean Bitcoin Association is geared towards ensuring the security of crypto traders in the country.
Over the last couple of months, a number of encrypted coin thefts have occurred in Korea from external hacking attacks. Certain standards were set by the Association as they carried out inspections on the cryptocurrency exchange platforms.
Also, the chairman of the KBA did not disclose a detailed score or security rating of each cryptocurrency exchange, casting doubt about the fairness of the inspection.
Professor Kim Yong-dae of Korea Advanced Institute of Science and Technology has commented about the results of KBA’s inspection.
“Some crypto exchanges are doing okay. But I believe other exchanges should invest more in their security systems.”
Minimum standards used by the KBA
The KBA-backed inspection carried out was mainly conducted via interviews by third-party experts which were authorized by the Korean Bitcoin Association between the months of June and July of this year.
In terms of the minimum requirements used to clear the exchange platforms, the KBA suggested that the cryptocurrency exchanges should have the following:
- cold storage solution
- the majority of funds user stored in cold storage
- hold sufficient reserves
- Strong anti-money laundering protocols
- Segregate user and company funds
One important inspection process, a hacking simulation on the exchange platforms, was left out of the process.
The chairman of KBA’s self-regulatory committee, Jhun Ha-Jin also mentioned that meeting the minimum security requirements does not mean that the exchanges are immune from any hacking attempts.
Although the results of the inspection were generally positive, the chairman of KBA’s self-regulatory committee, Jhun Ha-Ji, however, did mention that there were some security flaws present in the 12 exchanges despite passing the minimum requirements.
Out of fear that it could ignite a series of cyber-attacks on the cleared crypto exchange platforms, Ha-Jin did not explain what the outstanding problems were.
South Korea to get new crypto bills
Regulation of cryptocurrency activities in Korea is apparently not concluded. The South Korean National Assembly would be holding a session from July 13 to26.
The session will see regulators discuss the future of cryptocurrencies and Initial Coin Offering (ICO) markets within the country.
In a bid to fast-track the regulation of cryptocurrency and ICO in the country, the Financial Supervisory Service (FSS) stated in May that a subtler approach to cryptocurrency regulation is inevitable.
The statement read:
“It’s almost certain that cryptocurrencies will be classified as assets and the main issue will be centered on how to regulate them properly under the unified frame that will be agreed upon between G-20 nations. Given the current stance, this isn’t good, but we will step up efforts to improve things.”
Three members of the National Assembly will submit bills, including:
- Representative Park Yong-Jin of the ruling Democratic Party of Korea
- Representative Chung Tae-ok of the main opposition Liberty Party Korea (LPK); and
- Representative Choung Byoung-gug of the minor opposition Bareun Mirae Party
Song Hee-Kyung of the LPK will also host a policy debate on the security practices of domestic cryptocurrency exchanges.
The debate will be co-hosted by the Korea Internet and Security Agency (KISA) on July 19.
Both the upcoming National Assembly session and policy debate coincides with the upcoming deadline for the implementation of G20 unified cryptocurrency regulations in July.
The positive results from KBA’s regulatory review is a great win for the crypto community. Korea is a massive crypto market and full regulation can bring it significant inflows of money.
The results may also help the Korean government take a more favorable stance when it comes to cryptocurrency exchange policies.
In all, Korean crypto exchange platforms meeting the nation’s minimum requirement could boost retail investors’ confidence in the market.