Information keeps arriving from this Asian country that is creating regulations around the cryptocurrency world. This week we have heard how South Korea wanted to shut bitcoin exchanges down. Now it has clarified its position regarding cryptocurrency exchanges: they will have to meet six conditions if they want to keep operating.
South Korea Creates Regulations
South Korea has decided to follow China when it banned ICOs from operating in the country. But China took a step forward and has also forbidden virtual currency exchanges. Now South Korea is preparing a bill that tries to prohibit all Bitcoin transactions (and other cryptocurrencies) unless exchanges follow six rules.
“The objective of this Law is to protect good merchants and establish a strong financial order regulating similar reception behaviour,” reads the Act on the Regulation of Similar Reception.
But these are not bad news for the cryptocurrency market, at least for South Korea’s largest bitcoin exchange Bithumb. “A right set of regulations will rather nurture the virtual currency market, and we would welcome that;” it wrote on an email to Reuters.
The Six Conditions
First: the customers must keep their funds separately. Second, exchanges must provide information to its users about investment risks. Third, exchanges must confirm users’ real names (know your customer policy). Fourth, cryptocurrency exchanges must have a strict anti-laundering policy (AML). Five, they must have an asset protection system like a dispersion of cryptographic keys. Finally, the transactions must be transparent and public.
According to the Regulation, if the law is violated, there could be an imprisonment for up to five years or a fine that can reach $50 million won (South Korean currency). Furthermore, the upcoming bill will increase the penalties up to 10 years of imprisonment and $500 million won.
South Korea and Cryptocurrency Explosion
In the last year, South Koreans have arrived to the cryptocurrency market due to Bitcoin price surge. The same has happened across the whole world. The cryptocurrency market has called the attention of many new individuals and investors.
South Korea is one of the countries that manages the most important volume in cryptocurrencies. At the moment of writing this article, the South Korean Won is the third currency that manages the most important Bitcoin volume in the world. It moves more than the Euro and the majority of the currencies. The Japanese Yen and the US Dollar account for more than 75 percent of the total bitcoin volume.
If the different cryptocurrency exchanges in South Korea adapt themselves to these new requirements, then, the markets will not suffer from this decision. At the moment Bitcoin is being traded around $16,500 according to coinmarketcap.
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