Client contracts of South Korean crypto exchanges will be revised

South Korea's financial regulator believes that the consumer contracts that customers must sign when registering with exchange operators create problems for users when making withdrawals and tend to be difficult to deal with consumers at all levels

The Korea Fair Trade Commission (KFTC), the country's economic competition regulator, has ordered twelve exchanges to review their adhesion contracts that they say do not meet consumer protection rules. In such contracts, the weaker party has no choice in the agreement to accept or reject, that is, it accepts the terms imposed by the business.

Consumer protection in South Korea is governed by several statutes, including the Consumer Protection Law, as well as the Contract Adhesion Law passed on December 31, 1986.

It was later updated to take into account the development of the Internet and is now known as the Protection Law consumer rights in electronic commerce (“Electronic Commerce Law”). Its rules provide for consumer protection during online transactions. This is the main law that the regulator refers to when considering the standard rules and regulations regarding the operation of crypto exchanges, and how they are applied under the Standardized Contracts Act (RSCA).

Allegations of dishonesty

“According to the Fair Trading Commission, existing rules prohibit exchanges from improperly restricting users from withdrawing their deposits or providing other services, or from forcing users to suffer financial losses if they resign from membership,” writes Yonhap.

South Korean cryptocurrency exchanges have been very active in trading recently. Three of them were searched by prosecutors on suspicion of purchasing bitcoins stolen from customer accounts.

The issuance of orders occurred approximately a month after 12 digital exchangers in South Korea voluntarily underwent a full audit to minimize financial and reputational risks.

It should be noted that this policy fully reflects the regulatory approach to the domestic cryptocurrency space. And although the Korean authorities under public pressure abandoned the ban on cryptocurrency trading, the ban on anonymous trading among domestic exchanges came into force earlier this year.