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South Korea Formulates an Emergency Regulatory Framework to Govern Cryptocurrency

Dec 16, 2017 Posted /  9124 Views

South Korea Formulates an Emergency Regulatory Framework to Govern Cryptocurrency

South Korean Cryptocurrency Ecosystem Finally Get Regulated

In South Korea an Emergency committee met yesterday December, 14 to set up a regulatory measure for cryptocurrency to govern cryptocurrency operations in the country. The committee came up with resolutions which included a working regulatory framework for cryptocurrency in the country and a series of prohibitions to protect the traditional financial system from the volatile cryptocurrency ecosystem.

To start with the committee resolved to put a ban on virtual bank accounts used for trading cryptocurrency cutting off the linkages between cryptocurrency trading and the normal bank operations.

The ban on the banks was not yet actively deployed during the time of the emergency meeting. A report indicates that the government was worried that if all transactions were banned, a controversy may sprout up over infringement of private properties. Traditional financial companies are prohibited from buying, securing and investing in virtual currency in South Korea.

Banks, Foreigners, and Children Banned from Trading cryptocurrency

A ban has been put to prevent the participation of Foreigners, minors, and Banks in trading cryptocurrency in South Korea. The new measure includes a requirement that calls on banks to stop issuing virtual accounts for digital currency Exchanges. This type of accounts according to the Investor, a local news source, is issued by the bank to cryptocurrency Customers. Cryptocurrencies traders in Korea recently showcased how these virtual accounts issued by Banks aid their trading in the cryptocurrency platforms.

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The government was interested in identifying the owners of the virtual accounts to establish whether they are minors for the foreign citizens asking bank officials about the details of the owners of the accounts. The banks, however, responded saying that they have no clue about the issue of virtual accounts in the exchanges and even do not have any idea about their owners. Most major banks in South Korea recently responded to the government demand saying they would stop providing virtual bank account services to cryptocurrency exchanges at the nearest time possible.

The justification of preventing children from trading virtual currency is conceivable but it’s still unclear why the government wants to ban foreign citizens from trading cryptocurrency in South Korea.

Financial Crime Surveillance being Emphasized

This regulation now gives cryptocurrency legal status in South Korea- an issue which many governments in other parts of the world are still pounding upon. This would mean the government should read the relevant telecommunication infrastructure to ensure the smooth running of this new vibrant industry in the country.

The government is acting fast enough in this regard by strengthening the crackdown and punishment of cryptocurrency related crimes. The definition of the cryptocurrency crimes was broadened to include malicious investment schemes, Recruitment of Multi-level sales, questionable coin sales and illegal transactions. A report from a local news outlet quoted the statement saying,

“We are going to involve the police in conducting special crackdown on hacking and personal information infringement cases as related to virtual currency. A detail investigation of the actual conditions of the transactions and appropriate refunds would be carried out”

The government has tasked the Financial Services Commission (FSC), The Financial Supervisory Service (FSS) and the Korea Exchange to monitor cryptocurrency trading trends and any anomaly in stocks related to virtual currencies. As regarding taxation, the government announced that it goes deep into the issue and form a task force comprising of private experts and related government agencies to formulate a required tax framework.

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Tags: South Korea cryptocurrency govern cryptocurrency

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