Bill to strengthen internal controls at virtual asset exchanges introduced Thursday
Rep. Baek Seon-hee of the Rebuilding Korea Party introduced a bill Thursday to strengthen user asset protection and restore market confidence in the virtual asset sector, citing a large-scale bitcoin overpayment incident at a domestic exchange earlier this year as the catalyst.
The incident occurred in February, when a domestic virtual asset exchange mistakenly distributed a large volume of bitcoin during an event reward payout. Some customers sold the erroneously credited bitcoin before the error was caught, causing sharp swings in market prices. The exchange drew on its own assets to reconcile customer holdings, while financial authorities formed an emergency response team and launched a review of internal control systems and operational stability across the industry.
The Financial Supervisory Service said in connection with the incident that a real-time system linking actual holdings with internal ledgers was needed, and noted the limitations of the current user protection regime for virtual assets.
According to Baek, current law covers the segregated custody of customer deposits and virtual assets, insurance requirements and the monitoring of abnormal transactions — but contains no clear provisions requiring real-time reconciliation between actual holdings and internal ledgers, nor explicit standards for internal controls at virtual asset businesses.
The bill would require virtual asset service providers to build and operate information processing systems that keep actual holdings and internal ledger balances in real-time sync for all virtual assets held in custody on behalf of customers. It also mandates automatic transaction restrictions or suspensions when anomalies arise, such as balance discrepancies or abnormally large transfers.
In addition, the bill would codify internal control requirements by obligating virtual asset businesses to establish internal control standards and appoint compliance officers. A new provision would also hold businesses liable for damages suffered by customers as a result of system failures or operational errors on the part of the provider.
"This incident was not a simple technical mistake — it revealed that internal controls and asset verification systems in the virtual asset market have yet to be sufficiently institutionalized," Baek said. "The virtual asset market must now be equipped with the same level of internal controls and user protection as legacy finance. We will build the institutional foundation to prevent incidents from occurring in the first place, rather than scrambling to contain the damage after the fact."
bigroot@heraldcorp.com
