South Korea Prepares Bill to Provide Legal Framework for Cryptocurrencies
A South Korean politician, Representative 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 South Korea’s electronic system to prepare a bill to provide a legal framework for cryptocurrencies. 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.
At present, 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 lot of market value. Bithumb is taking 75.7% by itself. According to Legislator Park, this is a problem, because there is no supervision or legal structure that informs a business about what action to take.
Lawmakers in South Korea have been skeptical about cryptones to date. Officials have viewed these assets as mere speculative opportunities. Officials have been particularly critical of ICOs, because they seem to be a vehicle for “unreasonable gains.”
The current legal action taken by politicians in South Korea was announced in June when attorney Kim Kyung Hwan pointed to multiple legal issues related to cryptocurrencies.
In an article published in Chosun in 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.
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