Every time a country tries to introduce new cryptocurrency regulation, there is a valid reason for concern. South Korea is the next country on the list to do exactly that, which is a potential problem. Considering how South Korean cryptocurrency exchanges are driving much of the trading volume right now, additional regulation could upset the balance. As of right now, local financial regulators wish to tighten the existing regulation across the country.
WHAT IS NEXT FOR SOUTH KOREA?
Ever since Chinese regulators made it less appealing to use local exchanges, most of the cryptocurrency trading volume has shifted to both Japan and South Korea. More often than not, at least one South Korean exchange dominates the trading volume for particular currencies. Bithumb is often on that list, although Coinone should not be overlooked either. That situation may soon change, though, depending on what local regulators have planned for the future.
The country’s Financial Supervisory Commission has announced a joint task force meeting related to cryptocurrencies. The Korean Fair Trade Commission and National Tax Service will be part of this meeting as well. Based on the information we have received, it appears all of those agencies are looking to strengthen existing cryptocurrency regulation in the country. That means they will revise the current legal guidelines and make adjustments accordingly.
The goal is to improve user authentication procedures and banks’ suspicious transaction report systems. This means there will be some additional scrutiny regarding all cryptocurrency activity taking place in South Korea moving forward. Additionally, there will be more monitoring of overseas remittance service providers who rely on Bitcoin and other cryptocurrencies to make their services more appealing to the masses. It is a bit unclear what this measure will entail exactly, since the wording is rather vague for the time being.
Last but not least, South Korean regulators aim to introduce new regulations on domestic trading of cryptocurrencies. A revision of the Act on Reporting and Use of Certain Financial Transaction Information is on the agenda. Additionally, it appears all local cryptocurrency exchanges will need to implement consumer protection measures, which is pretty interesting. So far, there is no deposit for consumer assets option, which is one of the possible solutions to be implemented. We may see a lot of changes in South Korea over the coming months, although nothing has been set in stone just yet.
All of these changes may sound quite invasive, but overall this will be pretty positive. South Korean regulators have no intention of making cryptocurrency illegal. The proposed changes are all positive in one way or another, even though they may force exchanges to pause some of their functionality for the foreseeable future. Improving upon the existing legislation and regulation will be beneficial to cryptocurrency in general.
One potential downside, however, is how there will be punishment for cryptocurrency ICOs looking to raise funds in the form of stock issuance. Doing so is an effective violation of the country’s Capital Market Act. It will be interesting to see how that particular development plays out, as cryptocurrency ICOs are pretty controversial. The changes coming to South Korea will be positive on the whole, even though they may cause some initial friction.