As a 62 trillion won wrongful Bitcoin payment incident unfolded at the Bithumb virtual asset exchange, the financial authorities agreed that exchanges should be regulated at the level of financial firms. They also said they plan to make additions during the legislative process for the Digital Asset Basic Act (second-stage virtual asset law).
Financial Services Commission Vice Chairman Kwon Dae-young said during a National Policy Committee emergency inquiry on the morning of Feb. 11, "We will reflect internal control standards and the like in the second-stage legislation and prepare to give them binding force." Kwon added, "Financial companies are under constant monitoring, and when there is concern about a major incident, multilayered, multiple control devices are in place. We are preparing to reflect those elements in the second-stage legislation at a rapid pace."
Financial Supervisory Service Governor Lee Chan-jin said, "Currently, internal control standards and risk management standards are not stipulated in the Virtual Asset User Protection Act," adding, "Because it operates under a self-regulatory framework, there are institutional limitations." Lee added that it is also necessary to review whether Upbit's system, which reconciles the holdings in virtual asset wallets with the numbers in the exchange's internal databases every five minutes, is appropriate.
Lee continued, "At the time of the Samsung Securities incident, the system was overhauled so that entries exceeding the total number of issued shares could not be input at all," emphasizing, "Only when there are linkage systems that match actual holdings with book balances in real time can system stability be secured. Please address these aspects in the second-stage legislation."
Bithumb CEO Lee Jae-won, regarding whether it would be subject to regulations equivalent to those on financial firms, said, "We are operating our business in compliance with the Act on Reporting and Using Specified Financial Transaction Information and the Virtual Asset User Protection Act as governing laws. We are steadily pursuing internal control goals equivalent to those of true financial companies, and as the basic act is prepared, we are fully ready to conduct business under such regulations." Lee added, "We pledge to fully meet regulation, supervision, and internal control requirements equivalent to those for the financial industry and financial service providers."
Commonly referred to as the second-stage legislation, the Digital Asset Basic Act is additional legislation intended to cover areas not regulated by the current Virtual Asset User Protection Act, including virtual asset service providers, virtual asset transactions, and related infrastructure. The financial authorities had been preparing to introduce the bill before the Lunar New Year holiday.
However, due to the latest Bithumb incident, the financial authorities identified the need for additional regulatory provisions and plan to pursue measures including: ▲ internal control standards equivalent to those for financial companies ▲ mandatory periodic checks by external institutions of virtual asset holdings ▲ imposition of strict liability for damages without fault when user harm occurs due to computer system accidents, among others.