A man looks at a screen that displays cryptocurrency price changes Tuesday morning at the Bithumb Exchange in Seoul. (Yonhap)
Blockchain industry experts urged the government to introduce detailed guidelines on real-name accounts required for all cryptocurrency exchanges under implementation of a new law known as the Specific Financial Transactions Act.
Slated to take effect Thursday, the new rule obligates registration of all virtual asset operations, making it only possible for operators to conduct trades carried out with the real-name accounts opened via local banks.
The new rule is introduced to prevent money laundering, but it will impose substantial costs on underfunded startups, said Koo Tae-eon, a lawyer who specializes in tech business issues. Currently, only four exchanges out of an estimated more than 100 have partnerships with lenders.
“Since the promulgation of the law a year ago until now, so many crypto exchanges have tried to abide by the new law by getting real-name accounts from the local banks, but it didn‘t work. Even those that are equipped with an information security management system and have CEOs with no criminal records were not able to forge a partnership with banks,” Koo said.
Pointing out banks being reluctant to issue real-name accounts, Kim Hyoung-joong, a professor at Korea University and the chairman of the Korea Society of Fintech Blockchain, urged financial authorities to quickly draft guidelines to ensure sound trades of cryptocurrencies.
The new rule would lift entry barriers and might create a market monopolized by just a few.
“Fostering startups that develop digital asset-related technologies which are key means of the future digital economy is an urgent task, but the new law will push them into a corner,” Koo said. “But this law which is applying to digital asset business regardless of business types and sizes prevents startups from growing and developing future technologies, and only the four exchanges might dominate the market.”
Experts also pointed out that the industry’s role in gaining confidence from regulators as well as investors.
“Industry players should join hands to get rid of illegal activities such as cross trading in order to gain confidence from the regulators and customers,” Kim of Korea University noted.
By Park Ga-young (email@example.com