December 22, 2024

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[THE INVESTOR] A top-ranking Bithumb executive called out the Korean government, saying there should be standards and a clear understanding on regulating cryptocurrencies. 

“The biggest problem with regulations is that (the government) doesn’t have a set of standards and also lacks understanding of blockchain technology and cryptocurrency,” Lee Jung-a, vice president of Bithumb said at Deconomy, a two-day blockchain conference, in Seoul on April 4. “The government needs to have a better understanding of the services that the exchanges provide.”

Lee believes cryptocurrency exchanges should not be categorized as a financial institution. “Realistically-speaking, it’s simply very difficult for exchanges to meet all the standards of financial institutions, such as accounting, finance, security and internal control,” she said. “Exchanges are like a bank for cryptocurrencies, which store coins and provide liquidity into the market. But the government’s latest stance has been simply to keep the Korean won from flowing into the cryptocurrency market.”

Bithumb’s average daily trading volume, which stood at 4 trillion won (US$3.80 billion) in January, was cut down to one-tenth after the regulations kicked in, according to Lee. 

“The government said it is interested in nurturing the blockchain industry. But the growth will be limited when it fails to correctly regulate cryptocurrency exchanges, which supply liquidity,” said Lee.
 

Lee Jung-a, Bithumb vice president

She noted that the regulator’s approach is like “trying to change a rugby ball to a soccer ball,” adding that the government appears to be trying to make it easier for them to control because the cryptocurrency market is hard to handle. 

Despite the regulatory hurdles, Lee said Bithumb aims to become a comprehensive financial platform, armed with various services such as payment services for fiat and cryptocurrencies, blockchain remittance and financial derivatives, among others. 

“These projects are already happening across the world” she said. “Instead of doing everything on our own, we are seeking ways to partner with different blockchain-based firms to create synergies. We are actively looking for good partners.” 

Lee said it also recently created a venture capital arm to increase investments in blockchain-related projects and conduct initial coin offerings. “We are also planning to establish a research firm, to provide better information for investors to evaluate.”

By Ahn Sung-mi (sahn@heraldcorp.com)