As a massive incident occurred at the virtual asset exchange Bithumb in which Bitcoin worth 60 trillion won was paid out to customers due to an employee's mistake, it is expected that tougher regulations will be added to the Digital Asset Basic Act being drafted by the financial authorities. The authorities view virtual asset exchanges as public infrastructure and say controlling the majority shareholder's equity should be required, and their reasoning has gained traction.
According to the financial authorities on the 9th, the Financial Services Commission aims to introduce the Digital Asset Basic Act in February and will review the final draft with public-private stakeholders. The Financial Services Commission has also reached agreement with the Democratic Party of Korea on the government bill. Key issues include: ▲ forming a stablecoin consortium in the form of 50%+1 share equity held by banks ▲ imposing a 15–20% equity cap on majority shareholders of digital asset exchanges.
The financial authorities say that, for a virtual asset exchange to be licensed, the majority shareholder's equity must be dispersed. The virtual asset industry has opposed equity regulations on majority shareholders of virtual asset exchanges, citing concerns such as industrial and investment contraction and infringement of property rights.
However, triggered by the Bithumb incident, calls for regulation across the virtual asset industry have gained strength. The financial authorities held emergency meetings for two consecutive days starting on the 7th to discuss Bithumb's erroneous Bitcoin payout. The Financial Services Commission formed an emergency response team with the Korea Financial Intelligence Unit (FIU), the Financial Supervisory Service, and the Digital Asset eXchange Alliance (DAXA), and began reviewing exchanges' overall virtual asset holdings and operations as well as their internal control systems.
At the meeting the previous day, Financial Services Commission Chair Lee Eog-weon said, "As this incident has exposed structural vulnerabilities in virtual asset exchanges' internal control systems, we will review overall internal controls not only at Bithumb but at all exchanges and establish appropriate internal control frameworks." Financial Services Commission Vice Chair Kwon Dae-young also said, "We view this incident gravely as a case that has revealed the vulnerabilities and risks of virtual assets."
Additional regulatory provisions may be added during the legislative process for the Digital Asset Basic Act. It is possible that detailed standards will be supplemented, such as verification systems for book transactions at virtual asset exchanges, automated controls to match physical assets with the books, and the establishment of risk management committees.
Last month, the authorities also discussed a regulation that would impose strict liability for damages on exchanges in the event of a hacking incident at a virtual asset exchange. At a meeting that day, Financial Supervisory Service Governor Lee Chan-jin said, "This is a case that starkly shows the structural problems of virtual asset information systems," adding, "We will seriously consider this and make improvements in the second-stage legislative process."