South Korea issued an official statement recognising Crypto Exchanges as Regulated Banks
As one of the leading powers in crypto, South Korea has always been held in high regard to all crypto investors and influencers. They are responsible for a reported 37% of the total crypto volume and their interest in specific to Bitcoin has noticeably increased over the past four months.
Currently, their position as recognizing crypto exchanges as regulated financial institutions and banks are setting a precedent in crypto history.
Local publications in South Korea have advised financial authorities in the country are in the final stages as classifying the exchanges as “CryptoCurrency Exchange and Brokerage”. In other words, this new classification will help the trading platforms to operate at a much larger space and increase their capacity.
The long way
The government of South Korea has been working tirelessly for many years to find a way how to implement practical regulations and policies to emphasize on the importance of preventing large-scale hacking attacks and security breaches from occurring (for reference, please refer to issues associated with Bithumb and Coinrail in early 2018).
In the past, local financial authorities have taken caution to issue any regulatory statements in terms of cryptocurrency in order to avoid misconception on their stand on the cryptocurrency sector.
This week, there was a revelation that the government has finally come to a consensus to recognize the crypto exchanges as a regulated financial business creating a new industry dedicated to crypto trading platforms.
In the short term, our team sees a negative impact on both the trading platforms and the investors because it will mean a much more strict KYC (Know Your Customer), AML (Anti Money Laundering) and customer verification policies.
Many exchanges will be likely obliged to renovate their internal management systems and dramatically improve security measures to remain compliant with the new policies.
The decision to legitimize the cryptocurrency sector will have many benefits to both investors and institutions. Moreover, it will become a safer and much more attractive area to invest for institutional investors and retail traders to enter the crypto marker. This will allow the digital assets to be considered an emerging asset class.