Fifty South Korean cryptocurrency exchanges have applied for certification under the country’s Information Security Management System — the first step in meeting stringent new crypto exchange regulations that will take effect on Sept. 24, according to a government press release.
- ISMS certification is the first Financial Services Commission requirement that domestic crypto exchanges must meet in order to continue operating after Sep. 24, in line with The Act on Reporting and Use of Certain Financial Transaction Information — better known as the crypto exchange law.
- ISMS is a system by which the Korea Internet & Security Agency certifies that a business meets certain standards of information protection. Some of its criteria are risk management, access control, system and service security management, and prevention of and responses to unexpected incidents. ISMS certification brings virtual asset businesses a step closer to becoming safe platforms for cryptocurrencies and ensuring transparency in cryptocurrency transactions.
- According to KISA, 20 Korean cryptocurrency exchanges have so far acquired ISMS certification, and 30 other exchanges have applied for but not yet obtained certification. Eight applications among the 30 are currently being revised and processed.
- After acquiring ISMS certification, exchanges need to obtain contracts with local banks to provide platform users’ real-name bank accounts for withdrawals and deposits of Korean won on their trading platforms. This is to minimize the risk of financial crimes that take advantage of anonymity, such as money laundering, embezzlement and price manipulation.
- The government failed initially to quantify the number of exchanges in the country, making it difficult to ascertain just how many had shut down as a result of the new regulations. However the strictness of the new rules is suspected to be behind service suspensions by a significant number of exchanges, including Coinfinit, Trebit, Bitkiny and Coinnest.