South Korean Regulation on cryptocurrency

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South Korean Regulation on cryptocurrency

26 Feb. 2018

Investors were alarmed by South Korean regulatory proposals to combat bitcoin speculation earlier this month. But market participants are making a good statement as the new regulations go into force on Tuesday.

The Financial Services Commission of South Korea confirmed to CNBC Tuesday that the new rules it announced earlier this month had been implemented. However, a representative said it was still too early to discuss their potential consequences in an email.

South Korea does not recognize cryptocurrencies as legal tender, and while exchanges are allowed, they are subject to stringent governmental oversight.

New Rules for Cryptocurrency Exchanges

The regulator announced in a document released on January 23 that starting on January 30, it will only permit cryptocurrency trading from real-name bank accounts. According to the text, these regulations allowed banks to fulfill their KYC AML duties.

The FSC stated in the document that the regulations were meant to "limit room for crypto assets to be utilized for criminal activity, such as murders, money laundering, and tax avoidance."

The markets were rather optimistic when the new regulations went into force. The slightest informational blip can be interpreted out of context in cryptocurrency, as in this instance.

Following "enough discussion" with several government institutions, including the finance ministry, the Korean justice minister, Park Sang-ki, claimed his agency was "essentially crafting a bill to restrict cryptocurrency trading through exchanges."

As noted by Reuters, any proposed legislation would need to be approved by parliament, which may take months or even years. Even if this were to occur, the timing would seem odd given that local elections will take place this year and that younger folks in Korea are very interested in cryptocurrencies like bitcoin, Ethereum, and others.

Looking back only a few short weeks, today's statements contradict previous statements made by the government's financial officials, who had stated that they intended to prohibit minors, foreigners, and organizations from holding and dealing with cryptocurrency.

Banks Must Offer Fair Services To Cryptocurrency Exchanges

A big accomplishment for the national cryptocurrency market was reached on October 30 when South Korea's top financial body formally approved banks to collaborate with the crypto exchange for the first time.

Choi Jong-Ku, a commissioner for the Financial Services Commission (FSC), said that the FSC had given banks the go-ahead to collaborate with cryptocurrency exchanges. They did this by offering virtual bank accounts during the state affairs audit, which was convened by both political parties in South Korea to assess. These monitor the progress of every government department and agency under the presidential administration of Moon Jae-in.

Every bank account holder in South Korea is given a digital bank account by the accounts provider, in this instance, a bank branch, to provide an immediate and effective mechanism to trade digital assets.

South Korean cryptocurrency investors do not need to wait between one and 5 days for withdrawals and deposits to be processed since they may use local banks' security to store their South Korean money on marketplaces without risk.

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