On November 26, the National Government Affairs Committee of the National Assembly of South Korea passed the amendment to the Act on the Reporting and Use of Specific Financial Transaction Information (Special Financial Act).
According to the new bill, all cryptocurrency-related businesses will be required to report and register as digital asset businesses to the Financial Intelligence Unit (FIU) of South Korea’s financial regulator, the Financial Services Commission (FSC), and there will be no restrictions on cryptocurrency exchanges and service providers. Anti-money laundering obligations are imposed.
secondary title
Tomorrow will be the final review of the House of Representatives
text
image description
Bithumb/Graph Source Network
text
text
1. Define cryptocurrency-related companies as "digital asset operators (VASP)";
2. Digital asset operators must comply with the operator’s business, such as reporting to financial institutions (FIU) (undeclared operating companies will be punished with imprisonment for less than 5 years and a fine of less than 50 million won), anti-money laundering obligations (customer confirmation and suspicious transaction reporting, etc.) and additional obligations;
3. Financial companies that trade with digital asset operators must abide by the following obligations: check the representative of the operator and the purpose of the transaction, check whether the operator has submitted a declaration, and whether the funds are managed separately.
secondary title
Upbit large amount of cryptocurrency stolen
image description
upbit was attacked by hackers / picture source network
Upbit’s announcement shows that at 12:06 noon on November 27th, Beijing time, 342,000 ETH in Upbit’s hot wallet was transferred to an unknown wallet address. According to Odaily's query, the wallet address is a new address with no previous transactions, and currently ranks 29th on the Ethereum Rich List. At present, the hacker has not split the 342,000 ETH. When Upbit discovers this abnormal situation, it immediately takes the following actions:
Users will stop withdrawing coins in the next two weeks;
For the ETH assets that have been transferred, Upbit will supplement them with spare assets;
Transfer other token assets from hot wallet to cold wallet storage.
In this regard, the SlowMist security team suspects that it may be related to the APT (Advanced Persistent Threat) attack that has been active before. . At the beginning of the year, Upbit discovered such attacks from North Korea, and the possibility of insiders cannot be ruled out. In fact, exchanges, as an important pool of funds for cryptocurrencies, have always been the key targets of hackers, and the security of funds has always been the sword of Damocles hanging over the exchanges. In 2018, Youbit, Coinrail, and Bithumb, several leading exchanges in South Korea, were attacked by hackers successively, with a cumulative loss of nearly 100 million US dollars.
secondary title
Analyzing South Korea's Cryptocurrency Compliance Road
South Korea is one of the most active and largest bitcoin trading markets in the world.
Some analysts estimate that about 21% of global Bitcoin trading volume takes place in South Korea. About 4.5 percent of all bitcoin transactions globally were conducted in Korean won over the past year, making the won the fourth most widely used currency for bitcoin transactions, after the dollar, yen and euro, according to data from research site CryptoCompare. Such a crazy market has attracted a large number of project parties to flood into South Korea in an attempt to get a piece of the action. It is precisely because of the frequent cryptocurrency transactions in South Korea that hacker attacks occur frequently.
In December 2017, South Korean cryptocurrency exchange Youbit filed for bankruptcy after being hacked twice. It was also at that time that South Korea began to tighten the regulation of cryptocurrencies.
The frenzy of the market has also spawned a large number of virtual currency-related frauds. In order to protect the interests of investors and regulate market behavior, in December 2017, the South Korean government announced the prohibition of anonymous transactions of virtual currencies. In early 2018, South Korean regulators conducted on-site inspections of six banks, including KB Kookmin Bank and Korea Small and Medium Business Bank (IBK), in order to monitor whether these banks complied with anti-money laundering obligations related to cryptocurrency transactions.
The South Korean government announced a 24.2% income tax on digital currency exchanges. South Korean financial authorities then formed a special team in cooperation with the Korean Financial Intelligence Unit to oversee cryptocurrency exchanges and ensure that cryptocurrency businesses comply with existing regulations. From January 31, 2018, the South Korean government has authorized six banks to provide accounts that can use Bitcoin for transactions, including deposits, withdrawals, and currency transactions.
But the premise of all this is real-name registration, which obviously violates the anonymous nature of blockchain decentralization.
For some investors, this is a huge privacy sacrifice, while others are willing to give up their anonymity for the security of regulation.
On February 1, 2018, South Korean Finance Minister Kim Dong-yeon stated that the government always pays attention to the use of digital cryptocurrencies for illegal overseas transactions, and will formalize the management of digital currency transactions.
In March 2018, the South Korean government banned minors from participating in transactions; and banned South Korean officials from holding virtual currencies.
The most eye-catching actual action by South Korean regulators was that on May 11, 2018, South Korean police raided UPbit’s headquarters, mainly searching computer hard drives and ledgers. The reason for the search was that Upbit presented users with an illusion that it owns digital currency, and was suspected of deceiving consumers.
Although the results of the final audit confirmed that the firm confirmed that the Upbit exchange did not exaggerate the balance sheet data.
image description
Coinrail was hacked/picture source CoinSutra
text
text
However, as of June 2018, the vast majority of cryptocurrency exchanges still have not deployed the real-name system as required, and almost all small and medium-sized traders still use their own company accounts for transactions. At that time, financial institutions did not seem to cooperate, and the real-name system was not actually implemented. The new law once again puts forward the necessity of "real-name authentication access accounts", and it must cover all digital asset service providers, which shows the determination of this regulation.
epilogue
epilogue
From the above analysis, it can be seen that after the originally thriving South Korean cryptocurrency market experienced a series of security problems, the South Korean regulatory authorities took rapid regulatory measures, but some measures were not really implemented. Hacker attacks are hard to guard against, forcing the South Korean government to further improve the supervision of cryptocurrencies and establish a long-term mechanism as soon as possible. How to carry out effective supervision and effectively reduce the risk of hacker attacks, so that Korean exchanges can better provide protection for users, improve the security of assets, and then stabilize the market, may be the Korean regulatory authorities for a long time in the future challenges to be faced.
