Financial authorities in South Korea have yet to decide on whether to exempt blockchain technology from regulations on financial privacy, which may hurt Korea’s move to pursue the fintech-led fourth industrial revolution, a news report said Tuesday.
Blockchain is expected to be a key feature of financial technology infrastructure in Korea, as it offers enhanced security from tampering. But it requires records in a block of transactions to remain permanent, with no option to alter them retroactively. Allowing blockchain technology to do this might be construed as a breach of regulations on handling private information, local daily Money Today said.
In December, a financial consortium, made up of 17 local banks and 26 securities firms, announced a plan to introduce an identification verification system using blockchain technology within 2017.
South Korean law stipulates that private information must be deleted within five years after commercial use. The regulations are designed to protect people with outdated debt delinquency records from being denied loans.
Under the Credit Information Use and Protection Act, a financial company must remove personal data within five years after a transaction is completed. Meanwhile, under the Personal Information Protection Act, any personal information should be destroyed immediately after use.
Another challenge the financial watchdog faces is that two separate state-led bodies are in charge of two different regulations. The Financial Services Commission supervises the Credit Information Use and Protection Act, while the Personal Information Protection Act is under control of the Ministry of the Interior.
“Current regulations are the biggest challenges against the fourth industrial revolution wave’s foray into South Korea.” In Hoh, a computer science professor at Korea University, was quoted by the daily as saying.
Professor In added that existing laws are only able to regulate central servers and no regulation falls on blockchains that use peer-to-peer networks and a distributed time-stamping server.
“Changes in the law should keep pace with technological advances,” he said.