South Korea’s Government Could Make Landmark Crypto Legislation Rulings Very Soon
For some reasons, the pace at which South Korea now pushes towards policies about Cryptocurrencies has gathered significant speed this year. The country has moved from an otherwise ‘Laissez Faire‘ approach to one that needs its immediate attention, oversight, and regulation.
What Is Happening?
Back in the earlier months of this year, including the tail-end of last year, the South Korean government made it abundantly clear that it wanted to discuss and put into effect, regulations on the various cryptocurrency coin exchanges which had sprouted up over the years.
What was also made clear, however, was the government's relaxed approach towards discussing potential policy, continually putting off and delaying any meaningful discussions about them.
Government officials have since openly admitted that they were reluctant to put any legislation to paper as they believed that coin exchanges, traders, etc. would see it either as a sign of weakness on the side of the government or as them taking a staunchly pro-cryptocurrency stance which they aren't.
What has dramatically changed this sluggish and reluctant attitude have been the recent damage wrought upon some of its indigenous coin exchanges. The most notable examples being Bithumb and Coinrail, both of which were subject to significant security breaches, and both of which, as a result, saw the loss of millions of dollars in various cryptocurrencies.
In the eyes of the government, these coin exchanges operated outside of the remit of its financial regulatory body, the Financial Services Commission (FSC), being regarded, instead, as communications vendors. Under this state of affairs, any individual or company could run a coin exchange by merely obtaining the laughably inexpensive communications license, costing roughly $40 to purchase.
Unlike being regulated and registered under the FSC, these coin exchanges were under no obligation to abide by base capital requirements, leaving the matter of setting up a coin exchange as something anyone could do.
In the wake of these attacks on large-scale coin exchanges, the passing of regulatory legislation has been dramatically accelerated. What this inevitably means is that coin exchanges in the future will come under the purview of the FSC, saying that they must abide by rules such as :
- Strict security measures
- internal management system
- Know Your Customer (KYC)
- Anti-Money Laundering (AML)
- Transaction monitoring legislation
Speaking on behalf of the Democratic Party of Korea and the government, a KFIU spokesman stated that the regulations were necessary to curtail the current risk the coin exchange market faced presently.
“Under current regulations, there are clear limitations in preventing money laundering on crypto exchanges because the only way authorities can spot suspicious transactions is through banks.” The spokesman continues.
“If the bill of lawmaker Jae Yoon-kyung from the Democratic Party of Korea passes, local authorities will be able to impose identical regulations on crypto exchanges that are implemented on commercial banks.”
If the legislation does pass the government and come into law in 2018, the ground will be set for an influx of further domestic and international capital investment into the world of cryptocurrency and coin exchanges by extension.
Over the next 12 months, as South Korea and the world walk into 2019, the cryptocurrency market is, according to financial experts, expected to experience a dramatic upwards surge in value as it becomes more palatable to a broader international consumer base.
If the rise is coupled with pro-crypto legislation from the likes of South Korea, Japan, and the US among them, this ‘drastic rise' will become a supercharged bull.
Cities within South Korea, like Busan, have already demonstrated a more than open approach towards cryptocurrency, even before the push for legislation. The city has declared that it is more than willing to provide an open attitude towards cryptocurrency startups that want to establish themselves.