Korea Urgently Needs Crypto Laws as Thefts Rise, Regulator Says

(Bloomberg) -- South Korea’s financial regulator urged lawmakers to pass the country’s first cryptocurrency bill quickly, warning that local exchanges are rife with security flaws and money-laundering risks.

“While crypto markets have seen rapid growth, such trading platforms don’t seem to be well-enough prepared in terms of security,” Hong Seong-ki, head of the virtual currency response team at South Korea’s Financial Services Commission, said in an interview. “We’re trying to legislate the most urgent and important things first, aiming for money-laundering prevention and investor protection. The bill should be passed as soon as possible.”

South Korea’s cryptocurrency exchanges -- among the biggest worldwide by reported turnover -- have attracted increased global scrutiny after two of them were hacked last month, triggering losses in virtual currencies such as Bitcoin and Ether. A lawmaker from South Korea’s ruling party proposed a bill in March to increase oversight of the venues, but it has yet to be approved by the National Assembly.

If passed in its current form, the bill would put crypto exchanges under the FSC’s direct supervision. Hong said he hopes the National Assembly will act by year-end, adding that the timing is hard to predict.

Hong stressed that FSC oversight wouldn’t imply an official endorsement of crypto trading. If the bill is passed, the regulator will focus on policing the exchanges rather than promoting their growth, he said.

Hong’s personal advice to anyone considering virtual-currency investments? Steer clear. “I wouldn’t recommend putting money in cryptocurrencies,” he said.

©2018 Bloomberg L.P.