Due to Unrealistic Policy?
The South Korean government is strengthening regulations to eradicate an overheated cryptocurrency speculation but an increasing number of information technology (IT) companies, such as gaming and security, have declared to enter the cryptocurrency exchange market. In particular, they consider the shutdown of cryptocurrency exchanges an unrealistic policy so they are preparing to join the market as planned.
According to related industry sources on January 14, firms that are seeking to run new cryptocurrency exchanges, including NexG and HanbitSoft, are accelerating the establishment of exchanges.
Under the current electronic commercial law, companies can operate a cryptocurrency exchange when they register it as telemarketing business to a local government. HanbitSoft and NexG are now in the process of registration after they announced to build new exchanges.
The two companies, which are also listed on the KOSDAQ market, are now building security and anti-money laundering systems in order to run a cryptocurrency exchange from March according to their plans announced to shareholders. An official from NexG said, “We are planning to operate the exchange dubbed “NexCoin” and we already established the incorporation last week. We will set up all the systems provided by a normal financial institution such as anti-money laundering and security control systems.”
When the government’s regulations lead to the closedown of cryptocurrency exchanges, the companies are expected to become a global operator. Since digital currencies are being traded beyond national boundaries, they are preparing to launch a global cryptocurrency exchange from the very beginning, according to industry watchers.
An official from the industry said, “There were security problems when it comes to payment with a credit card 15 years ago. The related system and rules were established after a new technology appeared to fix these problems. I think we are in the same process now.”
There are also mixed opinions from the government and politicians over the shutdown of cryptocurrency exchanges. It takes six months to propose the law to close down cryptocurrency exchanges to the legislature initiated by the government. However, politicians are highly unlikely to discuss the bill due to pressure from a local election in June and constitutional amendment. In short, they can discuss the bill in September when the regular session of the National Assembly begins but it is still unclear whether to pass the bill even after politicians discuss the bill because there are mixed opinions among the ruling party.
Meanwhile, the Ministry of Science and ICT said that it is not responsible for cryptocurrency exchanges according to electronic commercial law and it should separately deal with the promotion of blockchain technology from cryptocurrency exchanges. However, it is planning to examine whether operators with sales of more than 10 billion won (US$9.42 million) or over 1 million users have an information security management system (ISMS) that meet the qualification standards according to the information communications network law.