Korea Tighten Up Cryptocurrency Exchange Regulations

Following the footsteps of Japan, today South Koreas Fair Trade Commission (FTC) has ordered several cryptocurrency exchanges to modify their contracts with current customers, in a move to try and better protect those who are trading cryptocurrency online. Very recently, Japan have made similar amendments to the laws which allow cryptocurrency exchanges to exist in the country in light of a devastating hack of a Japanese cryptocurrency exchange back in January. At the moment, exchanges operating in South Korea use Adhesion Contracts in order to keep their customer base. The contracts offer customers very little choice in how they do business with the exchange, so things like deposits can be held by the exchange, for example. The FTC has called these contracts unfair and has demanded that the exchanges in question make instant changes to their operations to ensure that customers are more protected against things like exchanges closing and of course, customers no longer wanting to be a part of the exchange. In the latter instance, at the moment if customers wish to cease their membership with an exchange, their deposit is retained, meaning they lose money. CCN have described this, not as a move towards banning cryptocurrency in South Korea, but actually as a move to provide better protection to customers. According to CCN, the chairman of South Koreas FTC, Kim Sang-Joo has said:

“Based on electronic commerce law, the government does not have the authority to close down cryptocurrency trading platforms.”

Therefore, it can be argued that again, this is not a move to disable cryptocurrency exchanges within South Korea and that actually the FTC do have the best intentions for the customers at heart. I personally believe this is an essential move by the FTC in ensuring that exchanges aren’t exploiting their customer base. It is totally unfair that at the moment, adhesion contacts mean that if a customer wishes to leave an exchange because they want to move to another or wish to stop trading, then they will lose a portion of their assets as a deposit. This is essentially theft and I can’t actually see why South Korean traders would agree to terms and conditions like this. Either way, intervention by the FTC will see fairer platforms for cryptocurrency interaction established within South Korea. With the FTC’s involvement now in the limelight, I do expect them to follow the trends in Japan and force exchanges to tighten up their security protocols etc. If the government can’t stop it happening then ultimately, their best bet is to make the environment safer for everyone else.