[Free Speech Forum] Losses from Cryptocurrency Trading Reach 5 Trillion Won...Urgent Need for Regulation

Since 2017, the amount of damage from cryptocurrency-related crime over the past four years is estimated to exceed 5 trillion won. This clearly shows that both cryptocurrency exchanges themselves and the transactions conducted on them are unstable. Investors are bound to have fundamental concerns about investing. For that reason, a systematic response, such as institutional support for cryptocurrency trading, is urgently needed.

It is questionable whether exchanges have made proper disclosures. There is considerable skepticism about the reliability of those disclosures. At present, cryptocurrency exchanges not only lack clear disclosure standards and procedures for cryptocurrencies, but even if false disclosures are made, there is no institutional framework in place to regulate them.

Institutional mechanisms to ensure the stability of cryptocurrency trading are also inadequate. Although accounts may be legally opened at banks, there is no way to verify whether proper audits have been conducted to ensure that transactions through those accounts are safe. Even when personal information is leaked through hacking and people suffer losses amounting to billions of won, there are effectively no countermeasures in place.

Without securing the stability of exchanges, it is impossible to guarantee investment security for investors. If safeguards for investors are insufficient, investment in cryptocurrency inevitably becomes even more risky. If the increase in investment risk stems from risks at exchanges, this can be described as a failure of the system. Therefore, establishing an institutional framework for cryptocurrency exchanges is urgently necessary. It must be transparently disclosed whether cryptocurrencies have been properly disclosed. A monitoring system is also needed to determine whether exchange operations are legal.

Advanced countries are rapidly putting regulations for cryptocurrency in place. Recently, the United States required cryptocurrency transactions exceeding $10,000 to be reported to the Internal Revenue Service. The Monetary Authority of Singapore (MAS) established guidelines for security tokens and introduced the Recognized Market Operator (RMO) licensing system, under which such tokens may be purchased, issued, and distributed.

South Korea must also establish an appropriate institutional framework for cryptocurrency transactions as soon as possible. Only then can illegal transactions be eradicated and cryptocurrency trading proceed in a stable manner. Furthermore, it will make it possible to promote the development of cryptocurrency. Institutions provide a stable foundation for investment. On that basis, investors can engage in free and stable trading. To achieve this, the government must first demonstrate a strong commitment to active institutional rationalization.

Sein Song, Intern Researcher, Center for Free Enterprise (CFE)

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Original title: [자유발언대] 가상화폐 거래 피해액 5조원...제도 마련 시급

Author: Se-in Song

Date: 2021-06-18

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&pn=11&idx=23994