The Korean Blockchain Association recently revealed that it has developed a self-regulatory framework for South Korea’s cryptocurrency exchanges. That framework would help move towards greater transparency of cryptocurrency exchange operations, as well as assuage government fears of money laundering, tax evasion, and other similar issues. South Korea isn’t the first country to develop a self-regulatory framework for the cryptocurrency industry, as Japanese cryptocurrency exchanges have already formed their self-regulatory organization (SRO).
SROs offer cryptocurrency businesses the ability to benefit from a regulatory regime that is more responsive to their needs than regulations proposed by government regulators. They have a decades-long history of working effectively in the financial services industry, which is why there is now a sudden move in many countries towards establishing cryptocurrency SROs. Because government regulators don’t always understand cryptocurrencies or how cryptocurrency businesses operate, an SRO is often the best option towards establishing what will inevitably be some sort of regulatory framework for the cryptocurrency industry.
As a self-policing framework, SROs also put the onus for keeping the industry fair to consumers on the industry itself. Membership in an SRO could be likened to a seal of approval of sorts, as continued membership in the SRO would be dependent on meeting certain standards relating to consumer protection, financial transparency, etc.
With first Japanese and now South Korean exchanges moving towards SROs, the time is ripe for European and American exchanges to do the same. Especially now that the world’s largest exchanges, Binance, OKEx, and Huobi are beginning to branch outside of Asia and establish operations in the US and Europe, the increased business and increased competition will make an SRO much more viable, needed, and beneficial.
While the freewheeling atmosphere of Bitcoin and cryptocurrencies has its advantages, many cryptocurrency investors want assurance that the businesses they are dealing with are operating above board. An SRO can help provide that assurance and continue building up the reputations of legitimate cryptocurrency businesses and the cryptocurrency community as a whole.