South Korean cryptocurrency exchanges have been ordered to revise their adhesion contracts after being accused of dealing a bad hand to its customers.
The Fair Trade Commission says the existing contracts give little protection to users who often have to shoulder huge losses when they decide to quit. Users are required to sign the contracts before opening an account.
Adhesion contracts usually give customers little choice to negotiate the terms. 12 exchanges are now expected to overhaul their contracts with fair terms according to Yonhap. The exchanges have also been accused of offering limited services.
Over a third of South Korean workers are said to hold an average of $5000 worth of cryptocurrencies.
The Fair Trade Commission which also ensures fair competition accuses the exchanges of unfairly keeping their customers from making withdrawals.
Members usually suffer all financial losses that result when they terminate their relationship with the exchanges, the FTC says.
FTC Chairman Kim Sang-joo caused a storm early in the year after calling for regulation of the sector. Many assumed a total ban was coming. The huge backlash that followed led the regulator to soften its stance.
The FTC issued a statement thereafter saying it was not possible to ban cryptocurrencies under the country’s laws.
South Korea remains one of the most vibrant locations for cryptocurrency trading worldwide.
No Anonymous Trading
Regulators have however been moving to stop anonymous trading. Traders are now required to use real-name bank accounts. Certain banks have stopped offering such services citing the high cost of operating real name accounts.
Meanwhile, South Korean exchanges have been reporting huge profits for 2017. BTC Korea which operates Bithumb made a profit of $402 million. This means that its profits rose by nearly 80% from the previous year.
The huge profits are not unexpected.
The demand for digital tokens reached fever pitch in 2017 with a good number of cryptocurrencies making astronomical gains.