South Korea considers adopting Bitlicense system for its exchange houses

Dec 15, 2017-Seoul, South Korea-A Screen shows the prices of bitcoin at a virtual currency exchange store in Seoul, South Korea. South Korean is studying ways to regulate speculative trading in crypto currencies as the latest emerges in prices stokes to craze over bitcoins. (Photo by Seung-il Ryu / NurPhoto via Getty Images)

South Korean regulators are considering introducing an approval system for cryptocurrency exchanges, Business Korea reported that an official participating in the government's virtual currency working group commented that the issue is under discussion.

The source told the media:

"We are positively considering the adoption of a change approval system as the additional regulation on cryptocurrencies. We are more likely to compare the New York State model that grants selective permission. "

The State of New York allows exchanges to exchange cryptocurrencies only when they have obtained a letter or license, known as Bitlicense, from the New York State Department of Financial Services (NYSDFS). Its restrictive controls and capital requirements have resulted in only 6 signatures being approved so far. Circle Internet Financial, XRP II, Coinbase Inc and Bitflyer USA received Bitlicenses, while the charters were awarded to Gemini Trust Company and Itbit Trust Company.

The publication states

"When the country accepts the New York model, it can bring cryptocurrencies to the institutional system and monitor the market in an orderly manner, according to the government," Business Korea explained, emphasizing that the final decision will probably be made after the local elections in June, The publication stated that The Ministry of Strategy and Finance is aggressively planning to adopt exchange approval systems. "

In late January, the NYDFS requested cryptocurrency trade data from South Korean regulators after two agencies carried out inspections in 6 of the main South Korean banks.

For its part, the government of South Korea began to announce regulatory measures for cryptocurrencies in mid-December. On December 15, bitcoin was quoted at more than 20.2 million won (USD $ 18,500), according to data from one of the largest cryptocurrency exchanges in the country, Bithumb.

In an effort to curb speculation, the Korean government considered extreme measures, including a total ban on encryption operations and the closing of cryptocurrency exchanges.

With the price of bitcoin at approximately 9,747,000 won (~ USD $ 8,967) at the time of writing this note, Korean regulators believe that "there is no need to use a hard line policy, including a total ban on operations, since the speculation has diminished ".

In addition, the country's prime minister confirmed last week at a meeting of the National Assembly that closing the cryptocurrency exchange houses "is not a serious consideration." Deputy Prime Minister and Minister of Strategy and Finance, Kim Do-yeon, also recently proclaimed that "They do not need to suppress virtual currencies"