In recent years, South Korea has achieved a national-level information center. Even 92% of its population is using the internet and therefore is a world leader of internet users. Even South Korea is the world’s third-largest Bitcoin trade market. The market has great potential to attract investors. However, since 2017 the government of Korea has put a ban on cryptocurrency. The government does not allow domestic companies to accept any exchange for selling cryptocurrency. Moreover, the cryptocurrency regulation in South Korea has taken a backstep since then.
Chaotic History of Currency
Up to 2017, the price of the cryptocurrency was equal to its global rate. But dramatically by the end of the year, the currency costs much higher prices. The traders even gained 30-50% profit for currency.
Unfortunately, crypto laws in South Korea were not strict and properly drafted. The South Korea government lacked proper crypto laws. This resulted in many illegal activities.
Police arrested the chief of Coinnest in April 2018 for misconduct ion of around tens of millions of dollars from the customer’s account. Apart from this Youbit like popular South Korean exchange faced hack attempts in April and December 2017. In the second attempt, Youbit filed for bankruptcy when it lost its 17% of assets.
Apart from this, the country faced a number of major hacking attacks. Some of the big ones were Coinrail hacking and Bithumb hacking attacks. The attacks wiped out a big portion of the companies.
Current Regulations for Cryptocurrency in South Korea
Cryptocurrency is not a legal tender in South Korea. It is a closely monitored regulatory system. The currency is neither a financial asset nor currency for the transaction so are currently tax-free. Still, the Ministry of Strategy and Finance is planning to announce some taxation in 2019. Many frauds also happened during this period like the currency mining Ponzi scheme.
As per current norms, users of the digital currency exchanges should use a bank account with the same name as used in their digital currency exchange account. Some of the traders were expecting a full ban on the currency. However, the finance minister Kim Dong-Yeon has maintained the no-ban policy.
The representatives of 14 Korean digital currency exchange including Bithumb. OKCoin and Upbit have released their self-regulatory guidelines on 17th April 2018 for currency exchange. All the members have to satisfy the following guidelines :
- To manage the digital coins of the client and their own in separate accounts
- They should be able to cope with any abnormal transactions quickly
- New digital currency can only be floated with some extra protection for the clients.
- Minimum held equity should be KRW2 billion
- Regular audit and finance report publications are mandatory.
As per guidelines, the exchange systems will also have to undergo thorough inspections. These regulations indicate full transparency and following government regulations.
Future of cryptocurrency in South Korea
Although there are plenty of crypto regulations from different agencies of South Korea, the traders are still waiting for specific guidance from the National Assembly. In June 2018 FSC has announced that virtual currency will be known as an “electronically transferable token that may have a storage value or can be used as a mean of exchange”. The country also plans to adopt Blockchain in the coming future.
Moreover, In the latest update, the South Korea Government plans to amend its Crypto Regulations. It can be said that in the future there will be a favorable market in South Korea of cryptocurrency.