The South Korean government is conducting on-site inspections of crypto exchanges following the release of its emergency measures for cryptocurrency regulation. The regulators have also notified the country’s largest exchanges that they are subject to the Information Security Management System certification requirements.
On-Site Inspections of 13 Exchanges
The South Korean Office for Government Policy Coordination and Prime Minister’s Secretariat issued an announcement on Wednesday to follow up on the emergency cryptocurrency measures unveiled last week.
On December 20, the Korean Fair Trade Commission (FTC) began carrying out “on-site inspections for violations of consumer laws, such as electronic commerce laws and contract laws, at virtual currency exchanges for three days,” the Office wrote.
The “target of the investigation,” the government elaborated, is “the 13 major virtual currency exchanges operating in Korea and reporting as telecom vendors under the E-Commerce Act.” They include Bithumb, Coinone, and Korbit. Among other factors, the Commission will “check whether there is any unfairness among the terms and conditions used by the business operators” and take action in accordance with relevant laws and regulations.
Furthermore, the government stated that their previous inspections of crypto exchanges revealed:
As a result of conducting on-site inspections on the major virtual currency exchanges, most of the inspected companies (10 companies) demonstrated administrative and technical security procedures such as the installation and operation of access control devices and encryption measures of personal information. Overall, the measures were found to be inadequate.
4 Exchanges Subject to Licensing Requirements
The government also revealed that the Ministry of Science and Technology announced on Wednesday that the country’s top 4 exchanges, Bithumb, Coinone, Korbit, and Upbit, are subject to the 2018 Information Security Management System (ISMS) certification requirements.
“ISMS is a system that certifies that the information protection system of companies with annual revenue of more than 10 billion won and average daily visitor of over 1 million is appropriate,” Hankyung explained.
Small and medium-sized exchanges are excluded from the ISMS certification obligation, the government explained. For these exchanges, the Korea Communications Commission (KCC) will be responsible, strengthening the protection of personal information. The Commission will also strictly enforce punitive fines and penalties for exchanges that violate related laws.
The announcement also warns the public of the risks of cryptocurrency investing. Citing the bankruptcy filing of the crypto exchange Youbit, the government asserted, “it is necessary to pay special attention to the risk of virtual currency speculation and to be vigilant about virtual currency trading participation.”
What do you think of the government’s on-site inspections of crypto exchanges and the licensing requirements? Let us know in the comments section below.
Images courtesy of Shutterstock, KCC, Korea FTC, and Business Korea.
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Author: Kevin Helms