Korea should designate cryptocurrency exchanges as de facto financial institutions so that these exchanges could protect investors and prevent hacking, money laundering, and narcotics crimes. These exchanges should shoulder the same legal responsibility as banks in preventing hacking, money laundering, and narcotics crime.
Police officers, lawyers, and government officials shared the view to promote cybersecurity in a seminar held at the National Assembly Monday.
Cryptocurrency exchanges should subject to the existing financial laws, including depositor protection law, the capital market law and the personal information protection law, they said.
“Blockchain symbolizes decentralization, but cryptocurrency exchanges hold all information in cryptocurrency trading, according to Chun Hyun-uk, a research fellow at the Korean Institute of Criminology.
He said in the blockchain-based cryptocurrency trading, cryptocurrency exchanges have all centralized data like banks. Thus, cryptocurrency exchanges should shoulder the same or similar responsibility as banks, he added.
In a nutshell, cryptocurrency exchanges should be regarded as quasi-financial institutions. Cryptocurrency exchanges should abide by the ‘cold wallet’ or ‘cold storage’ rule, meaning they should retain an offline wallet for storing crypcocurrencies. With cold storage, the digital wallet is stored on a platform that is not connected to the Internet. The cold storage protects the wallet from unauthorized access, cyber hacks, and other vulnerabilities that a system connected to the Internet is susceptible.
Lee Dong-gun of the Korea Internet Security Agency said like banks; cryptocurrency exchanges should protect their assets of investors. He added that financial regulators should supervise cryptocurrency exchanges.
A research fellow for the National Police Agency said cryptocurrency exchanges should provide data to the police when cryptocurrency-linked crimes take place for an adequate investigation. The data provision should be made in strict accordance with the law and regulations for protecting the privacy of investors, he added.
