South Korea stepping up regulatory activities
Authorities in the country of South Korea are stepping up their actions in the cryptocurrency realm. These authorities are concerned due to recent hacks that have been taken place at cryptocurrency exchanges and want to make sure that these cryptocurrency exchanges are meeting the guidelines for the safety of their site. Thus, they have taken it upon themselves to physically visit crypto related exchanges and make sure that there are measures taken have barriers against attacks. This activity is spurred by recent happenings such as the attack on Youbit which eventually led the crypto-trading company to close its doors within the current month of December.
An announcement made by their regulatory authority, the Office for Government Policy Coordination, elaborated further on details of the operations that have already taken place and on the actions that will continue to take place going forward.
Apparently, representatives of the aforementioned regulatory body have already started the process of visiting the premises of these digital currency exchanges and are performing their due diligence on the state of these companies.
They are primarily checking for the ability and the history of the firms and their compliance with the legal decrees that were imposed upon them by the government of South Korea. If these firms meet the criteria set, they can continue their operations without any hassles or issues. It seems that these officials are finding that the firms are not in compliance with rules set forth and are failing in meeting the established standards.
According to news reports, this lack of adherence is giving the inspectors pause and causing them a significant amount of displeasure.
The recently published notice provides a bit more detail on the operations, observations, and results.
The notice states there was an inspection of meaningful exchanges in the industry. The investigations consisted of administrative and technical security checks, and the results were subpar.
According to a rough translation, the notice read:
“As a result of conducting on-site inspections on the major virtual currency exchanges, most of the surveyed companies (10 companies) conducted administrative and technical security such as installation and operation of access control devices and encryption measures of personal information Overall, the measures were found to be inadequate.”
Youbit and it’s hack
Regulators have to make sure there is a certain amount of security and are pushed to do so due to the seeming lack of self-regulation by crypto companies participating the private sector. The latest hack of Youbit, caused the company to close down, causing distress to those who place funds in the exchange. A significant cause for alarm is the fact this firm was attacked in the past and still didn’t have enough security and measures implemented to ward off another attack. Another cause for concern was the fact that the company had been received these attacks within the same year. This latest occurrence made matters worse and later led to the firm to initiate the process of bankruptcy and close down.
Matters of National Security
The South Korean government may be stepping up its efforts due to concerns that they are being hacked from their neighbor to the North. South Korea has reason to believe that the government of North Korea is stepping up their efforts to steal digital assets from various exchanges and companies across the world.
The institution that investigates cybercrimes in the region, South Korea’s Internet and Security Agency (Kisa), stated that it is investigating how the hackers gained access to the exchange’s core systems.
The cybercrimes unit further stated that the previous attack on Youbit was tied to a hacking group working for North Korea. Separate incidents involving other South Korean exchanges such as Bithumb and Coinis are also being linked to the North Korean regime.
Self Regulation, Security or Imposed Regulations
If exchanges are not able to self-regulate and put in place proper measures to prevent hacks and minimize losses in the event of hacks, then governments will do it for them. When governments step in, they carry with them many constrictions that may not be favored by the marketplace.
Self-regulate or get regulated by external parties.