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| Bithumb CEO Heo Back-young, left, shakes hands with SeriesOne CEO Michael Mildenberger during an investment and partnership signing ceremony at the crypto exchange's head office in Seoul, Oct. 31. Courtesy of Bithumb |
By Jhoo Dong-chan
The nation's crypto exchanges are tapping into foreign markets while the financial authorities are wasting time setting up necessary regulations about virtual coins and blockchain technology.
Bithumb, the nation's largest crypto exchange, recently signed a deal with fintech firm SeriesOne to launch a compliant security token exchange in the U.S., the company said, Nov. 1
SeriesOne is also a certified crowdfunding platform approved by the U.S. Securities and Exchange Commission (SEC), and Bithum said they aim to open the security token exchange by the first half of 2019 and then list it on the NASDAQ in the second half.
Another crypto exchange giant Upbit also launched coin trade services in Singapore in October. Korbit, a virtual coin exchange unit of Nexon, recently acquired Luxemburg-based Bitstamp.
Coinone, which has operated crypto exchange service in Indonesia, opened its global virtual coin exchange CGEX in Malta, Oct. 29.
A series of moves going abroad reflect the financial authorities' incapacity in accommodating the newly emerging industry.
The Financial Services Commission (FSC) said earlier this year that it will incubate the nation's blockchain industry while protecting financial customers, but has yet to come up with any plan to promote the industry.
"The FSC plans a major organizational reshuffle to better protect consumers and proactively respond to financial innovation in the Fourth Industrial Revolution," an FSC official said earlier.
However, contrary to the FSC's statement, the agency has done nothing to accommodate the industry for months. Lenders, which had provided the real-name virtual account service with crypto exchanges, ceased their services based on the FSC's anti-money laundering guidelines.
NH NongHyup Bank ceased the real-name virtual account service with Bithumb and Coinis amid mounting concerns about its poor security systems and possible money laundering activities.
"If any money laundering activities are found in the lender's virtual account service, financial authorities will penalize the bank," said a NH NongHyup Bank worker.
"Lenders have no option but to approach the issue conservatively. I think the financial authorities should take initiative in controlling the matter."
A virtual coin and blockchain industry insider urges the government to ease related laws while introducing measures to promote the industry.
"Virtual coin and related blockchain technologies will come to our everyday life sooner or later," an official from blockchain tech firm FANTOM Foundation said.
"It's natural for crypto and blockchain firms to go abroad considering the nation's unfavorable legal environment and the government's indifference. I think Korea can be an ideal incubator to test drive new virtual coins and their blockchain systems, but the financial authorities are still standing idly by. Korea will lose initiative if the current situation prevails for awhile."
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