South Korea Prepares Bill to Provide Legal Framework for Cryptocurrencies

South Korea Prepares Bill to Provide Legal Framework for Cryptocurrencies
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A South Korean politician, Rep. Park Yong-jin of the ruling Democratic Party of Korea, is working to create revisions to a set of bills that will provide Bitcoin, Ethereum, and other digital currencies with a legal framework. The lawmaker commented about this on Monday. According to the Korea Herald, this has been a long awaited move for the purposes of protecting the Korean people.

These new revisions will alter the Electronic South Korea Prepares Bill to Provide Legal Framework for CryptocurrenciesFinancial Transactions Act. This means that traders, dealers, brokerage firms, and others in the ecosystem will now have to register with the Financial Services Commission in Korea. One of the registration requirements is that each company retains capital worth $436,300. The new bill will also create a strong regulatory environment, which will allow authorities to better grapple with tax evasion and other financial crimes in the cryptocurrency space.

No Legal Framework in South Korea for Bitcoin Trading; Political Skepticism about Cryptocurrency

Currently, South Korea has little to no framework that regulates institutions and businesses. The Korea Herald references the politician’s fears about this issue:

In the proposal, Park cited the need to address ‘the void of a state-led protection that guarantees digital currency’s value,’ ‘digital currency’s nonexchangablilty to other existing currencies’ and ‘the possibility of wreaking havoc on national economy from digital currency bubble burst.’
The article mentions that several of the country’s exchanges, including Bithumb, Korbit and Coinone, are absorbing a large amount of market value. Bithumb is taking up %75.7 by itself. According to lawmaker Park, this is a problem, because there is no oversight or legal structure that informs a business on what action to take.

Legislators in South Korea have been skeptical about cryptocurrencies to date. Officials have considered these assets to be merely speculative opportunities. Officials have been particularly critical of ICO’s, because they seem to be a vehicle for “unreasonable profits.”

Previous Cryptocurrency Legal Considerations in South Korea

The current legal action taken by politicians in South Korea were heralded in June when attorney Kim Kyung Hwan pointed out multiple legal issues surrounding cryptocurrencies. Bitcoin.com provided coverage:

“In an article published in Chosun on June South Korean Politician Prepares Bill to Make Bitcoin Legal23, Kim noted how the rise in bitcoin’s price prompted more people in South Korea to get involved. However, the country does not have regulations for the cryptocurrency. This causes uncertainty and “a lot of trouble” for anyone making bitcoin transactions, he said, adding that: It is expected that the regulations will be introduced [in South Korea] like Japan in the near future.”

The article noted that regulations would be enacted this year, but the government and the Financial Services Commission were having difficulty determining if bitcoin was money, a security, or an asset. It is still not clear how South Korean officials resolved this issue.