South Korea is working on a law to regulate cryptocurrencies to curtail the risks surrounding its use such as lack of customer protection and money laundering, says the country’s Financial Services Commission.
If implemented, the proposal will categorize cryptocurrency exchanges such as Bithumb, Coinone, and Korbit as “unauthorized fundraising” but will allow them to run under certain conditions. FSC said that they recognize cryptocurrencies are already being trading globally. FSC will require them to have customer protection among other features.
Official from FSC said,
“Cryptocurrency exchanges will be required to maintain standards for consumer protection. Such as having separate deposits for customers’ assets, and for increasing transparency. Also having a procedure for confirming customers’ identity such as KYC’s. The authorities will also be empowering to prosecute exchanges that break these rules”.
Currently, cryptocurrencies regulation fall under the Act on Consumer Protection in Electronic Commerce Transactions. It means they can be run as an e-commerce website by online vendors. The announcement comes after an earlier submission of “Bitcoin Regulation Act” by lawmaker Park Yong-jin.
Prime Minister Lee Nak-yeon expressing concerns that cryptocurrencies were using in money-laundering and drug trafficking. And said that the fact that Bitcoin exceeding 1 million won above Kosdaq (S.Korea’s electronic stock market) was “serious distortion or pathology”. Since they need for attention and action.
FSC met on Tuesday with law representatives and banking representatives. Thus to announce four anti-money laundering policies including measures to prevent use of Bitcoin in money laundering.
Yonhap News quoted FSC vice chairman Kim Yong-beom as saying,
“We will draw up thorough countermeasures that prevent cryptocurrencies, like bitcoin, from being a new channel for money laundering”.
South Korea is a leading Bitcoin market with high liquidity provided by Bithumb, Coinone, and Korbit crypto exchanges.
Han Seung-hee, the commissioner of the country’s National Tax Service, told lawmakers in mid-October that the country was looking into taxing cryptocurrencies. He said they were looking at the issue of how to best tax cryptocurrencies including the areas of capital gains tax, the VAT, and gift tax.