[Korean Exclusive News]
Author: Shin Yi Jin, South Korea
Large Korean local exchange markets such as UPbt and Bithumb have subsequently met with unfavourable situations, leading to falling credibility of the exchange markets. As a solution, the Korean Blockchain Association plans to complete evaluations on the implementation of discretionary regulations and set investors at ease by June 2018.
Following the seizure and search investigations on 11 May on UPbit which was accused of fraud cases, Bithumb was forced to postpone its plans to list its POPCHAIN (PCH) due to several doubts on the liquidity and technicality of the coin.
The above cases happened only a month after April when the local exchange markets revealed their willingness to put in efforts for self-purification through the implementation of discretionary regulations.
The subsequent shocks by the two largest local exchange markets have greatly damaged their credibility and caused distrust and confusion among the investors in the industry.
To address this, the Korean Blockchain Association aims to complete the general and security assessments of discretionary regulations and restore the credibility in the local exchange markets by the end of this month.
The Korean Blockchain Association gathered registrations for assessments from 12 member-exchange markets csuch as UPbit, Bitumb, Gopax, OKCoinKR, Komid, Cobit, Coinone, Coinzest, CPDAX, Hanbitco, DEXKO and Huobi Korea.
At present, the committee members of the Discretionary Regulations Committee and the Information Protection Committee are carrying out a two-track assessment – the general assessment and the security assessment. The assessments are expected to be complete by the end of the month and the decision for the implementation of discretionary regulations will be announced by mid-June.
The secretary-general of the Korean Blockchain Association, Kim Hyun-Ki, noted that “the implementation of discretionary regulations will be the means of resolving the regulatory problems that the local exchange markets are facing.”
Furthermore, the new regulations is expected to prevent the similar cases to the UPbit investigation, where UPbit is being suspected of executing transactions of cryptocurrencies which they do not actually retain.
Once discretionary regulations is put in place, the exchange markets have to retain possession of more than 100% of the total number of cryptocurrencies at the moment and stock them in separate digital wallets, managing them separately in order to prepare for when an investor wishes to withdraw them. Also, the markets have to stock more than 70% of the number of cryptocurrencies per cryptocurrency in a digital wallet completely separate from the network.
The system also requires the markets to be assessed on such asset management situation by the external auditor on a yearly basis. After the assessments are complete, the markets have to report the results to the association.
Kim emphasised that, through the implementation of discretionary regulations, “(the association) will create an environment where crypto-investors will feel more assured in their investments once the assessments are complete.”