South Korean cryptocurrency exchanges will be held fully responsible for any hacks or malicious activity that result in lost or stolen coins.
Cryptocurrency Owners Could Have It Easier
This is a big sigh of relief for most cryptocurrency holders within the nation. They now have some security when it comes to the storage of their coins. If the exchanges are ever hit with cyberattacks and coins are stolen, they will ultimately be replaced.
This is certain to be a challenge for most of the exchanges within South Korea in the sense that they will now have no choice but to boost their security settings. If they don’t want to be responsible for potentially thousands or millions of dollars in losses, they’ll have to do all they can to keep safety to a maximum. Otherwise, they’re going to wind up shelling out a lot of money to make up for the losses.
This is a solid way to keep hacks low and exchanges on their toes. No doubt this little tactic is likely to spread to other countries that also serve as cryptocurrency havens, such as Singapore, Japan and China. Japan, for example, already holds the record for the two largest cryptocurrency thefts in history, between Mt. Gox in February 2014 and Coincheck in January 2018. Together, roughly $1 billion in cryptocurrency was stolen through these hacks, and the exchanges are still in the process of reimbursing affected clients.
Ultimately, Japan got the FSA – Financial Services Agency – involved, which did an evaluation of several exchanges throughout the nation. The time had come for several exchanges to either put up or shut up, meaning it was their job to instill the best security tactics they could and keep their customers’ assets safe. If they couldn’t do this, they would be forced into suspension or permanent shutdown.
South Korea Is a Good Place to Start
For the most part, the FSA has made a huge difference in Japan, but the problems and threats associated with hacks and cyberthefts still remain, which means more steps need to be taken if clients are going to be protected. What we’ll likely see in the coming year or two are several other cryptocurrency exchanges – in Asia and beyond – instill similar tactics. This will ultimately work to legitimize the industry even further, and cryptocurrency could garner a reputation as being among the most solid investment platforms around.
Though not comparable to the likes of Mt. Gox or Coincheck, South Korea still has several “embarrassing” hacks in its past, including Bithumb in 2018. The exchange was attacked by malicious actors who ultimately stole more than $30 million in digital funds from the platform. Perhaps in some cases, it’s best to start small, which is what makes a country like South Korea a prime instigator of what could potentially be a long-lasting and international form of regulation.