Korea Blockchain Industry Promotion Association (KBIPA) has prepared ways to reform South Korea’s blockchain industry as there have been numerous incidences and moral hazards such as imprisonment of CEO of Coinnest and hacking incidences recently regarding cryptocurrency exchanges. It is going to give out ‘minimum standards’ to its members from its perspective as it has not had a license to establish cryptocurrency exchanges.
It is going to ask its members to secure more than 70% of cryptocurrencies inside of cold wallets to prevent hacking incidences and enhance its measures towards unusual transactions. It is also going to clearly state terms regarding AML (Anti-Money Laundering) as part of regulations and carry out security evaluations that follow Korea Internet & Security Agency’s (KISA) SMS (Information Security Management System Certification).
KBIPA announced its plan on evaluating voluntary restraints of cryptocurrency exchanges at Korea Federation of SMEs on the 17th. “Our goal is to establish orders for exchanges and to prepare safety devices for our customers.” said Chairman Jeon Ha-jin of KBIPA’s Voluntary Restraint Commission. “We are going to request South Korean banks to issue digital accounts if industries show efforts of securing transparency and stability of cryptocurrency markets.”
This voluntary restraint is implemented to secure cryptocurrencies inside of cold wallets and to protect people’s assets, enhance measures towards unusual transactions, and establish terms regarding AML.
Some of major regulations regarding protection of customers are Article 13 (obligated explanation), Article 13 (prohibition of using undisclosed important information), Article 18 (prohibition of controlling market price), Article 19 (prohibition of unfair trades), Article 21 (announcement of listed cryptocurrency), and Article 23 (making information of listed cryptocurrency public).
KBIPA clearly stated Article 11 (procedure of checking important matters related to deposit transactions of an account), Article 12 (procedure of checking important matters related to withdrawal transactions of an account), Article 13 (management of deposit transactions and withdrawal transactions of an account), and Article 17 (cooperation with financial organizations) s regulations related to AML that were added to current voluntary restraint plan.

Photo Image
<Korea Blockchain Industry Promotion Association held a press conference at Korea Federation of SMEs on the 17th and announced its plan to evaluate voluntary restraints of cryptocurrency exchanges. Chairman Jeon Ha-jin (3rd from the left) of Voluntary Restraint Commission is responding to a question from a reporter. Staff Reporter Lee, Donggeun | foto@etnews.com >

KBIPA is going to perform normal evaluations based on these articles and apply 1st stage positive restraint and 2nd stage negative restraint for evaluations on security.
Cryptocurrency exchanges that are wanting to become members of KBIPA receive qualifications after passing checklist evaluation (1st stage restraint) that includes user authentication, network management, server management, wallet management, access control, restoration, operation, and protection of personal information.
Members receive 2nd stage negative restraint after 3 months from starting Won trades. They have to distinguish services that can be hacked from assets that need to be protected and calculate level of risks and announce how they are going to take measures against these risks.
KBIPA is going to carry out its first evaluation on 14 members (total of 23 members) until the 31st of May and make relevant announcements on its homepage after going through votes from Voluntary Restraint Commission within 2 to 3 weeks from the 31st. Rest of 9 members and 3 members that are wanting to be members of KBIPA are going to receive evaluations in June sporadically. Third sporadic evaluation will take place in November.
Although both sporadic and scheduled evaluations are composed of regular and security evaluations, scheduled evaluation is carried out informally compared to sporadic evaluation. Members who pass sporadic evaluation will receive scheduled evaluation every November as part of an interim check.
Staff Reporter Ham, Jihyun | goham@etnews.com