Korean Watchdog Orders 12 Cryptocurrency Exchanges To Revise Customer Contracts

April 4, 2018 5:57 pm Published by

A dozen domestic cryptocurrency exchanges were ordered to revise their adhesion contracts by South Korea’s corporate watchdog to provide better protection to consumers, Cryptocoinsnews reported.

Yonhap news reports South Korea’s Fair Trade Commission (FTC) has demanded 12 cryptocurrency exchanges tear up their existing adhesion contracts that customers are mandated to sign while registering with the exchange operators.

Adhesion contracts are commonly known as ‘boilerplate’ contracts, the report said, where the weaker party has little choice in ‘take it or leave it’ agreement drafted by the business.

Commonly used in leases, insurance and mortgages, adhesion contracts, Korea’s FTC says, fail to provide adequate protection to customers enrolled in cryptocurrency exchanges, Cryptocoinsnews reported. 

The FTC, which also serves as the economic competition regulator, said current customer contracts from exchange operators ‘unfairly’ keeps users from withdrawing their deposits, the report said. 

The regulator went so far as to claim current practices among crypto exchanges force users to shoulder any and all financial losses when ending their membership with exchanges, the report said.

Prior to the announcement, authority chairman Kim Sang-Joo called for a nuanced regulatory approach toward the domestic cryptocurrency space in mid-January 2018, the report said. Speculation of a possible ban on all cryptocurrency trading was rife at the time after Korea’s justice ministry confirmed it was preparing legislation to do just that along with a complete shutdown of domestic cryptocurrency exchanges, Cryptocoinsnews reported. The intended measure triggered a fierce public backlash that eventually led to Korea’s president releasing a statement to cool fears of a ban.

“[Shutting down cryptocurrency exchanges] is not realistically possible,” FTC chairman Kim said at the time. “Based on electronic commerce law, the government does not have the authority to close down cryptocurrency trading platforms.”

Korean authorities subsequently moved to curb anonymous trading of cryptocurrencies among domestic exchanges on Jan. 30.

WN.com, Jack Durschlag

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