South Korean central bank Bank of Korea (BOK) governor, Lee Joo-yeol, has announced that Bitcoin will be regulated as a commodity rather than as a currency. The governor, however, claimed that the central bank will not be launching the regulation very soon.
During the audit of BOK by the National Assembly, Lee claimed that digital currencies like Bitcoin cannot be regarded as money based on the definition of the Bank of International Settlements (BIS).
“It is difficult to look at [virtual currencies] as money by [the definition] of Bank of International Settlements (BIS). Regulation (of virtual currencies) is appropriate because it is regarded as a commodity. It [cannot be] regulated at the level of a currency.”
The latest actions by South Korea on virtual currencies
To promptly tackle the issues involving cryptocurrencies, the South Korean government created in 2016 a digital currency task force to study the regulatory and licensing parameters for Bitcoin and Bitcoin exchanges. In early June 2017, a CNN report stated that the participants in the study ‘failed to agree on whether cryptocurrencies should be included in systems right now and how the systems work if they are included.”
Meanwhile, South Korea’s financial regulator, the Financial Supervisory Service (FSS) has issued a ban on initial coin offerings (ICO) guided by the task force. The aim of the ban is to protect investors from possible fraud. This move has led to worries of a campaign against the local digital currency trading market in the country that is similar to the crackdown recently launched by the Chinese government.
FSS vice chairman Kim Yong-bum was quoted at the time that ICOs increase the risk of fraud, so a ban will be implemented.
“We are worried about adverse effects such as increased risk of fraud, the ICO will be prohibited in all forms.”