Over twenty cryptocurrency exchanges in South Korea have agreed to undergo evaluations, including the country’s top four exchanges: Upbit, Bithumb, Coinone, and Korbit. This is part of their self-regulatory efforts, in conjunction with the Korean Blockchain Association.
21 Exchanges Participating So Far
The Korean Blockchain Association, an industry group formally launched in January with 66 members, is primarily focused on self-regulation. The association, “composed of 33 virtual currency exchanges, said 21 of its members, including major players Upbit, Bithumb, Korbit, and Coinone, will undergo evaluations,” Yonhap reported on Wednesday.
According to local media, crypto exchanges that have confirmed their participation in self-evaluation include Glosfer, Nexcoin, Zeniex, Kairex, Kcx Exchange, Komid, Coinway, Coinzest, Plutus DS, Dexko, Gopax, Okcoin Korea, and Huobi Korea.The main purpose of the evaluations is to determine if members have complied with a set of self-regulatory measures that the group has set.
An official of the association was quoted by Asia Economy saying, “I respect member companies’ willingness to create a secure cryptocurrency market…We will make efforts to ensure strict and fair self-regulatory review.” Kim Hwa-joon, vice chairman of the association, was quoted by Zdnet detailing:
"It will include capital standards, security standards, principles on listing procedures, disclosure of information, etc, and I expect investors to believe that they [exchanges] are more stable if they have passed the examination".
According to data collected by the Korean government, sales by local cryptocurrency exchange operators soared approximately 88-fold in 2017 compared to the previous year.
Self-Regulatory Efforts Challenged
The association first announced self-regulation in December when the government introduced a set of cryptocurrency measures to curb speculation in the crypto market. It “also established a set of specific ethical codes for the virtual currency bourses, including strict rules on insider trading and market manipulation,” Yonhap noted.
However, recently small and medium-sized exchanges have been voicing concerns regarding the effectiveness of joining the association and declaring self-regulation. They were led to believe that, by joining the association, they would be able to obtain virtual accounts from banks after the government-mandated real-name system went into effect.
However, following the implementation of the real-name system, banks are reluctant to issue virtual accounts to small and medium-sized exchanges, choosing only to provide services to the country’s top four exchanges.
Earlier this week, twelve crypto exchanges including Gopax, Coinnest, and Coinpia, sent a joint statement to the association, requesting a meeting to discuss the issue of virtual account issuance.
Kim acknowledged the problem and was quoted by Fntimes saying:
"Disputes may arise in operating the organization..We are trying to solve this problem".
The association has also discussed the problem with Choi Heung-sik, the director of the country’s Financial Supervisory Service (FSS). He promised to encourage banks to work with more crypto exchanges, citing that there are three banks that have set up the real-name system but are not using it to issue virtual accounts for crypto exchanges.
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