South Korea's Regulatory Evolution: Important Steps for Crypto Exchanges, ICOs and Blockchain

Latest developments - classification of crypto exchanges The latest move from South Korea has seen them essentially reclassify cryptocurrency exchanges as legal entities.

The new draft, which adds a lot of legitimacy to the blockchain space in the country, now classifies exchanges as "Crypto asset exchange and brokerage."

This is an important redefinition because it "Recognizes crypto exchanges as regulated financial institutions," as opposed to their previous classification as "Communication vendors."

"Classifying all things blockchain was to be expected, especially when it comes to the exchanges and the critical need for regulations. It wasn't too long ago when you could open a cryptocurrency exchange with a"mail order distributor" license in Korea.

"Recently, I sent out a warning to investors about leaving their crypto assets in exchanges and a few hours later, Bithumb was hacked! I still remember a seminar at a law office involved in policy making, and the speaker saying that the exchanges were not liable if hacked or their data was breached."

By allowing remittance, the exchanges in South Korea were now tied to the Financial Services Commission.

Yoon goes on to explain that this move from the government is clearly positive for everyday users of the exchanges - because of the difficulties already felt when depositing and withdrawing - but also points out that the exchanges will be heavily monitored now.

The South Korean move could be compared to the way in which Japan is looking to sort out its issues with exchanges - especially in the light of two major hacks in Tokyo, that of Coincheck on January 26, 2018 and Mt.Gox on February 7, 2014 - with their Financial Services Authority investigating exchanges and issuing business improvement orders.

Yoon does not think the backlash will effect the Korean exchanges as much, he actually expects this regulation to stimulate the growth of more exchanges.

"There are many banks here that are in a wait-and-see mode. A lot of Korean companies are going to Singapore and other [places] to do their ICOs, so the Korean government is acting fast to incorporate these regulations. Companies that have blockchain businesses in South Korea seem happy to see regulation coming in, as it spells a better future for the space."This is another step in the journey of legitimizing the asset class by providing regulatory framework for facilitating value exchange of digital assets, in one of the most leading geographies in the space," Agada Nameri, General Manager of iCapital, told Cointelegraph.