South Korean Financial Authorities Demand Transparency in Crypto Exchanges

02/24/2023 05:47 • AI Insights • 116 views

On February 24, the South Korean financial authorities recently asked the country’s encryption exchange based on the Korean won to prove the driving principle of its pledge service and the evidence related to its merchantability. Three quarters of the Korean-based crypto exchanges that provide pledge services in the country recently admitted that they had received a request from the country’s Financial Supervision Institute to investigate their pledge services.

South Korea’s financial regulator is investigating the pledge service of the country’s encryption exchange

Analysis based on this information:

The South Korean financial authorities have recently taken steps to demand transparency in the country’s crypto exchanges. This comes as three quarters of crypto exchanges that provide pledge services in the country have admitted to receiving a request from the country’s Financial Supervision Institute to investigate their pledge services. The authorities have asked the exchanges to provide evidence related to their merchantability and the driving principle of their pledge service.

This move by the South Korean financial authorities is not surprising given the country’s history with crypto exchanges. In 2018, South Korea was home to some of the world’s biggest crypto exchanges, but a series of hacks and scams led to a crackdown by the government. Since then, the authorities have taken steps to regulate crypto exchanges more strictly, including imposing stricter reporting requirements and requiring exchanges to obtain government approval before listing new cryptocurrencies.

One of the main concerns for the authorities when it comes to crypto exchanges is transparency. The nature of cryptocurrencies, with their anonymity and lack of centralized control, can make it easy for bad actors to commit fraud or engage in other illicit activities. By demanding transparency in crypto exchanges, the authorities hope to prevent these types of activities and protect consumers from harm.

The request for evidence related to the merchantability and driving principle of the pledge service is also significant. Pledge services allow users to borrow funds using their cryptocurrency holdings as collateral, and have become popular in South Korea. However, these services can be risky for users, as the value of their collateral can fluctuate wildly. By requiring exchanges to prove the soundness of their pledge services, the authorities are taking steps to protect consumers from the potential risks and consequences of using these services.

In conclusion, the demand for transparency in South Korean crypto exchanges is an important step in regulating the industry and protecting consumers. By asking exchanges to prove the soundness of their pledge services and provide evidence related to their merchantability, the authorities are taking a proactive approach to ensuring that crypto exchanges operate in a safe and transparent manner.

Overall, this move may lead to a stronger and more trustful crypto exchange industry in South Korea if cases of fraud shrink and speculation is tamed, so users can benefit from the people’s trust.

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