South Korea’s top financial regulators have clarified their position following reports by local media that they have been considering a possible ban on all cryptocurrency transactions, particularly bitcoin.
Regulators Discuss the Extent of Regulation
Reports circulated on Friday that South Korean regulators are considering banning all kinds of cryptocurrency transactions. Hankyung publication, for example, quoted a government official saying: “We are actively considering ways to prohibit transactions on domestic exchanges by judging virtual currency trading as a deceptive means of deceiving people and similar currency transactions.”
On Monday, Financial Services Commission (FSC) Chairman Choi Jong-ku clarified to reporters at a luncheon meeting that “the FSC is mapping out measures to restrict [cryptocurrency] transactions to some extent,” which he did admit include “an all-out ban,” Yonhap reported. “The restriction is aimed at minimizing side effects of bitcoin transactions and reducing speculative investment,” the news outlet added. Choi was then quoted by Asia Economy:
We are discussing to what extent the government will regulate the trade, including the prohibition of trade.
Outright Ban Needs Legal Grounds – Ministries Divided
The chairman noted that the Ministry of Justice is currently reviewing measures to regulate cryptocurrencies. News.Bitcoin.com reported last week on this ministry being put in charge of a new Virtual Currency Task Force in order to “set up and implement the regulatory measures through consultation between the related ministries.”
FSC vice chairman Kim Yong-beom, who is part of the task force, was quoted on Monday by Joongang Daily:
There is an opinion that we should hurry to ban virtual currency transactions within the task force, but we will analyze the legal basis and the market impact in a comprehensive way.
Choi confirmed that “there must be legal grounds (to prohibit all transactions).” In addition, the publication pointed out that “it is known that there is a great difference between ministries on whether there is a legal basis for prohibiting all transactions.”
Not First Discussion of Regulating Exchanges
The Virtual Currency Task Force includes not only the financial sector but also the Ministry of Strategy and Finance, the Fair Trade Commission, the National Tax Service, and the National Police Agency, Maekyung detailed. “The Ministry of Justice wants strong trade regulations, but the Ministry of Finance and the Financial Supervisory Commission are said to be hesitant,” the publication noted.
Kim was quoted saying, “The Finance Ministry mainly focuses on preventing institutional finance companies from jumping into virtual currency transactions.”
This is also not the first time South Korean regulators have suggested restricting bitcoin transactions. In November, news.Bitcoin.com reported on the FSC proposing to regulate cryptocurrency exchanges, suggesting that they “will be required to maintain standards for consumer protection.”
Reiterating the regulators’ earlier plans to regulate cryptocurrency exchanges, Yonhap conveyed:
It is expected that the government measures related to virtual currency will not be a one-sided regulation that prohibits virtual currency trading altogether, but a regulation that limits investment amount and investment qualification.
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