South Korea Moves to Impose Stricter Digital Currency Regulations

The South Korean digital currency task force held a joint meeting in September 2017 to discuss the introduction of stricter regulation and monitoring of virtual currencies, including Bitcoin. The task force is composed of the country’s central bank, financial regulators and cryptocurrency companies.

The meeting was attended by the Korea Fair Trade Commission and the National Tax Service, among others. Agenda items included the strengthening of user authentication procedures at exchanges and the ‘suspicious transaction reporting’ systems used at banks for deals related to virtual currencies.

In his statement, Financial Services Commission (FSC) and task force chairperson Kim Yong-beom said that cryptocurrencies are neither money, nor currency, nor financial products.

“At this point, digital currencies cannot be considered money and currency, nor financial products.”

Possible ban on initial coin offerings and other developments

Other topics discussed at the meeting include the possible banning of ICO fundraising platforms due to violations of the Capital Market Act. Under the law, raising funds through stock issuance using cryptocurrencies is considered an illegal act.

An FSC official claimed that they will expand on the provisions of the Act on fundraising.

“We will clearly state the foundations of the Act on the Regulation of Conducting Fund-Raising Business Without Permission for illegal fund-raising impersonating digital currency investment and strengthen levels of punishment.”

Also discussed at the meeting are the need to tackle the lax cybersecurity practices in the country that have resulted in substantial customer data breaches and theft of funds at a major Bitcoin exchange. Other concerns were also discussed, such as the character of virtual currency traders, taxation and permits.

Meanwhile, South Korean lawmakers are already advancing a set of bills to create a regulatory framework for cryptocurrencies. Such move will likely lead to the legalization and regulation of virtual currencies like Bitcoin and Ethereum in the country.