The end of the grace period of the Specific Act is approaching 50 days. Virtual asset operators must complete the report before the end of the grace period. Many virtual asset exchanges are not preparing for Information Security Management System (ISMS) certification even it is required, raising concerns about this. If it is not reported, the virtual asset exchange business is impossible, and it is predicted that about 600,000 virtual asset users will take a hit.
The end of the grace period for the Special Act is approaching 50 days
Let's take a look at how the industry, the government, and the political world are moving as the grace period for the Special Act is over 50 days away.
Virtual Asset Industry
The industry is betting on ISMS certification in preparation for the end of the grace period of the Special Act on September 24. ISMS certification is the top priority for virtual asset business. If the operators do not receive it and cannot report as virtual asset business operators, they will not be able to operate the exchange.
According to the data received by the office of People Power Party Yoon Chang Hyun on July 27 from the Korea Internet & Security Agency (KISA), a total of 15 exchanges are currently undergoing ISMS certification review. There are about 60 domestic exchanges, of which 20 have received it. If all 15 exchanges receive it, there will be a total of 35 certified exchanges. If the number of ISMS-certified exchanges increases to 35, the scope of due diligence on banks and the guidance of the Financial Supervisory Commission will expand.
Many virtual asset-related companies, including COCO Entertainment Korea, which is preparing a virtual asset exchange, are spurring ISMS certification
However, about 50% of exchanges have not even applied for ISMS certification. According to the ‘Guidelines for ISMS Certification Application’ recently announced by KISA, it usually takes 3 to 6 months from application to certification. In other words, it is expected that it will be difficult to even receive an examination by a related institution, except for the 40 exchanges that have applied for ISMS certification.
Even if the operators obtained ISMS certification, anxiety is still there. In order to maintain the cryptocurrency and currency exchange service as it is now, it is necessary to cooperate with a bank to issue a real-name authentication account. Therefore, even if the ISMS certification is obtained, the issuance of a real-name account may be rejected according to the bank's standards.
The Political World
As the mass closure of virtual asset exchanges has become a reality, the political world is showing a movement to revise the Special Act. 10 related amendments have been published regardless of the opposition. These bills are generally aimed at maintaining a healthy order in the virtual asset market and preventing damage to users. In particular, they are raising a single voice for the extension of the grace period for the Special Act, which expires on September 24.
10 amendments to the Special Act have been proposed
The amendment proposed by Rep. Jo Myung Hee of People Power Party changed the real-name account to a financial transaction requirement rather than a non-acceptance requirement, so that the exchange could report without an account. In addition, she ordered that the deadline be extended by six months, taking into account the fact that banks are not even accepting applications for issuance of real-name accounts even though it is only 50 days before the deadline, and the National Assembly processing period of the amendment bill.
Rep. Yoon Chang Hyun of the same party proposed the introduction of a virtual asset-specialized bank managed by KoFIU so that domestic virtual asset business operators can receive real-name accounts, and the extension of the reporting grace period by six months so that the revised procedure can be applied.
Rep. Lee Yong Woo (Democratic Party) proposed a plan to use the authorization system (transaction business) and registration system (storage management, wallet service business) together depending on the specific industry. Yank Kyung Suk (Democratic Party) and Kwon Eun Hee (People Power Party) proposed to apply the ‘authorization system’ to all virtual asset industries.
The problem is that it takes a lot of time to reconcile the detailed issues of the bills and come up with alternatives while there are 10 amendments in a row. How to overcome the burden of the National Assembly, which will increase in the review of the bill, is expected to be the key to the passage of the amendment.
The Financial Services Commission is taking the principled position that there is no extension of the grace period for the Special Act. However, in the face of growing concerns about the closure of the virtual asset exchange, this passive attitude of the financial authorities is causing great concern.
Of course, the government is preparing a soft landing plan for virtual asset exchanges. Recently, the financial authorities have allowed exchanges that have not been issued with real-name bank accounts to conduct transactions in a limited way by filing a separate report to FIU. At first, it was known that if operators do not report, they will be kicked out from the market immediately, but if an exchange that has obtained ISMS certification makes a separate report, the transactions such as BTC market will be opened without a real name account.
However, as mentioned earlier, as the number of ISMS-certified exchanges does not exceed 50%, allowing the transaction does not seem to have much effect. Also, it is questionable whether a virtual asset exchange that cannot change the won is worth the existence.
Financial Services Commission is taking the principled position that there is no extension of the grace period for the Special Act
There is room for change in the government's attitude. With the presidential election less than a year away, the bad news of the virtual asset exchange's closure can certainly put a significant burden on the government and the ruling party. In addition, depending on whether the currently proposed amendment to the Special Act is passed, an extension of the grace period may be considered.