South Korea is moving forward with a bill to regulate cryptocurrencies. According to the country’s Ministry of Justice, the bill will primarily focus on cracking down criminal activities including crimes perpetuated through multi-level and door-to-door sales.
Bill To Focus on Criminal Activities
The South Korean government has announced that the legislation to regulate digital currencies “is expected to focus on cracking down on criminal activities,” such as “multi-level crimes,” Yonhap News reported.
The existing regulation for criminal activities does not explicitly include digital currency. A digital currency task force has been set up by relevant government departments including the Ministry of Justice, the Financial Services Commission (FSC), the Ministry of Strategy and Finance, and the Fair Trade Commission. According to the publication, its task is “to clarify the grounds for punishment” for digital currency-related crimes and recommend relevant amendments to the laws and regulations.
The Ministry of Justice said last week that the punishment rule will be significantly increased from “5 years imprisonment or fines of less than 50 million won” to “10 years imprisonment or penalty of less than 500 million won,” the publication detailed, adding that:
It also plans to establish confiscation rules for criminal profits to increase the effectiveness of punishment.
Currently, there is no clear law regarding digital currencies seized as criminal proceeds. Last month, news.Bitcoin.com reported on Suwon District Court in South Korea ruling that the confiscation of bitcoins by the police in a criminal case was inappropriate.
Amending Existing Regulations
The discipline system for virtual currency trading activities is also included in the amendment bill of the Act on Regulation of Similar Receiving Act, according to the news outlet. “The purpose of this Act is to protect good traders and to establish a sound financial order by regulating ‘similar receiving behaviors’,” Article 1 of the law explains.
“Similar receiving behavior” is defined in Article 2 of the law as “an act that does not receive authorization or permission under other laws and does not register or notify and procures funds from an unspecified number of persons.”
Since the government does not view digital currencies as currencies or financial products, it is trying to regulate them through the above Act, Yonhap News detailed, adding that:
The government will set up regulations for securing consumer protection and transparency of transactions for virtual currency traders who conduct sales activities such as the sale, intermediation, and arbitration of virtual currencies in the amendment.
These regulations include the obligation to prohibit transactions on the Door-to-Door Sales Act, including multi-level and door-to-door sales, the news outlet described.
In addition, the government will also amend some Financial Information Acts to impose an anti-money laundering (AML) obligation on digital currency trading including requiring exchanges to report suspicious activities to the Financial Intelligence Unit. An FSC official was quoted saying:
The amendment plan is being revised with the aim of passing the revision bill of the Act on Regulating Receiving Behavior in the National Assembly this year…We will clarify the grounds for punishment for similar receiving behaviors that imply virtual currency investment by adding the phrase ‘virtual currency or virtual currency trading.’
What do you think about South Korea’s proposed regulations for cryptocurrency? Let us know in the comments section below.
Images courtesy of Shutterstock.
Need to calculate your bitcoin holdings? Check our tools section.