News Regulation

South Korea’s FTC orders 12 cryptocurrency exchanges to revise customer contracts

South Korea’s Fair Trade Commission (FTC) has demanded 12 cryptocurrency exchanges to fundamentally 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 where the weaker party has little choice in ‘take it or leave it’ agreement drafted by the business.

Korea’s FTC says that commonly used in matters involving leases, insurance, mortgages and more adhesion contracts, doesn’t provide adequate protection to customers enrolled in cryptocurrency exchanges. The FTC, which is also the economic competition regulator, said current customer contracts from exchange operators unfairly keeps users from withdrawing their deposits. The regulator claims that current practices among crypto exchanges force users to shoulder any and all financial losses when ending their membership with exchanges.

The FTC’s measures follow notable remarks from the authority’s chairman Kim Sang-Joo who called for a nuanced regulatory approach toward the domestic cryptocurrency space at the beginning of the year.