However, the government is not free from criticism that it has only decided on the ministry in charge of this countermeasure and rethrows the existing countermeasures. In particular, it is pointed out that it has not come up with any new measures to protect investors, such as illegal coins or exchange accidents.
The Financial Services Commission takes charge of cryptocurrency management and supervision
The core of the “virtual transaction management plan” announced by the government on the 28th by the Ministry of State Affairs Coordination Office jointly is the Financial Services Commission for cryptocurrency management supervision and institutional improvement to enhance transaction transparency, and science and technology development for blockchain technology The Ministry of Information and Communication was assigned to each.
The government has decided on a ministry in charge four years after it came up with the first countermeasures in the coin mania in 2017. As the number of cryptocurrency investors soared, it was judged that the market could no longer be neglected. In fact, according to the data submitted by the Financial Services Commission to the National Assembly, there were 5873,000 investors (as of the last 3 days) in the four major exchanges: Bithumb, Upbit, Kobit, and Coinone.
The Financial Services Commission, which has been in charge of supervising cryptocurrency management, will establish a related organization and promote a plan to reinforce manpower. Considering the variety of unfair practices related to cryptocurrency, the National Tax Service and the Customs Service have also been added to the Task Force (TF) of the Ministry of Virtual Assets, which is operated by the Office for Government Coordination.
The Financial Services Commission also decided to promote the revision of the enforcement ordinance of the Special Act. It was decided to prohibit the way that cryptocurrency operators mediate or mediate direct trading and exchange of coins issued by themselves. Binance, an overseas exchange, issues its own cryptocurrency Binance Coin (BNB) and distributes it within Binance. This means that Upbit and Bithumb cannot issue their own coins.
In order to prevent the use of inside information, it was banned from trading directly by executives and employees of the exchange or coin officials. The Financial Services Commission plans to revise the enforcement decree before September 24, when the report is completed, to take effect as soon as possible.
Cryptocurrency businesses must file a report to the Financial Information Analysis Institute (FIU) under the Financial Services Commission by September 24th. The Financial Services Commission estimates that about 60 cryptocurrency exchanges are currently operating. Among them, 20 places, which are at the third level, are certified by Information Security Management System (ISMS). ISMS certification means that it has secured the stability of the computer system, such as preventing hacking.
However, no exchange has yet filed a declaration with the FIU. This is because, along with ISMS certification, no place has received the real name confirmation deposit and withdrawal account confirmation, which is the main reporting requirement. Of the 20, only four exchanges (Bitsum, Upbit, Coinone, and Kobit) currently operate real-name verification deposit and withdrawal accounts, but they have not yet been issued a’real-name verification account verification’. The Financial Services Commission said, “We will continue to inform the exchanges of the reporting schedule and ask investors to take note,” and said, “When a report comes in, we will review it as soon as possible to eliminate uncertainty.”
Limit coin management as a’money laundering prevention’ measure… Countermeasures for’re-disaster’
The supplementary measures the government announced this time put a plan to prevent exchanges and employees from trading coins in order to prevent market adjustment, but no measures to prevent so-called’forces’ or’operations’ were presented. It is pointed out that this is insufficient for investor protection as there is still no measures to prevent the listing of insolvent coins that can cause damage to cryptocurrency investors or to prevent damage caused by the closing of the exchange.
According to the Special Money Act, the exchange is subject to inspection or supervision by the FIU, but the authority to request data submission and the scope of supervision and inspection are limited in the areas of money laundering prevention regulated by the Special Money Act. An official in the financial sector said, “It is unreasonable in the first place to protect investors with the Special Money Act, a bill aimed at preventing money laundering.”
In the end, voices come out that a full-fledged countermeasure against cryptocurrency is possible only after institutionalizing business rights and preparing new legislation. According to the National Assembly Bill Information System, five laws related to cryptocurrency are currently being submitted.
Legislative bills require exchanges to be registered or approved by the Financial Services Commission, and allow the Financial Services Commission and Financial Supervisory Service to inspect, supervise, and sanction the overall business and property situation of business operators.
Together with Democrats Lee Yong-woo and Kim Byeong-wook, Yang Gyeong-sook made it clear that the exchange is responsible for any loss caused by computer problems such as delays or suspension of the exchange, or damage caused by hacking. In fact, between the beginning of 2017 and March 2019, there were 9 hacking cases that occurred at the domestic virtual asset exchange, and the damage amounted to about 126.6 billion won. Rep. Kang Min-guk put in the bill a proposal to prevent coin sprawl by allowing only coins that have been approved by the authorities to be listed.
Various bills are expected to be reviewed in the course of discussions at the National Assembly in the future. However, it is unclear how much the investor protection device will be institutionalized, as the authorities adhere to the principle stance that’cryptocurrency is not a financial product’. An official from the National Assembly’s Political Affairs Committee said, “Rather than being in the discourse of whether it is a financial product or not, it is important to eliminate the gray area as much as possible.”