Following Rep. Park Yong-jin’s announcement of a proposed bill to provide a legal framework for digital currencies like bitcoin, South Korea has now set up a task force to determine if bitcoin should be regulated.
Task Force Set Up
Bitcoin.com recently reported on Rep. Park Yong-jin of the ruling Democratic Party of South Korea preparing a bill that will provide bitcoin, ethereum, and other digital currencies with a legal framework.
Following lawmaker Park’s efforts towards digital currency legislation, Business Korea reported that the South Korean Financial Supervisory Commission is taking a prudent approach. According to an official of the Commission:
Currently, a relevant task force team is studying overseas cases to determine whether or not regulations are needed. Nothing has been decided about the legislation of a bill about virtual currency.
Similar Move by Other Countries
South Korea is not the only country to set up a task force to evaluate if bitcoin should be regulated, nor is it the only country looking to others for examples.
Recently, India announced that it would set up a task force to come up with recommendations regarding bitcoin regulations, which are expected in 6 months. In Southeast Asia, the Deputy Prime Minister of Thailand has also ordered the country’s central bank to study bitcoin and learn from other countries as well. In addition, he proposed creating a dedicated fintech unit that can explore the opportunities presented by bitcoin.
While several countries are still evaluating whether to regulate bitcoin, the Korean Financial Supervisory Commission noted that Japan stands out as having already revised its laws to recognize and regulate the cryptocurrency.
Possible Needs for Regulations
Domestic bitcoin exchanges in South Korea such as Bithumb, Korbit, Coinone and Coinplug are not subject to regulations and oversight by financial authorities, unlike other financial institutions in the country. However, large-scale transactions are being made through them.
Lawmaker Park pointed out that currently these exchanges “receive about 6.5 billion won (US$5.8 million) a day by 0.5% of transaction money as a commission,” even though they were established without any license from financial authorities. Business Korea then quoted him saying:
No legal regulation in Korea has led to no definition of virtual currency and furthermore, made virtual currency-related activities as a whole illegal. Korea must make discussions in terms of law and systems.
Currently, all these exchanges are “registered and operating as a ‘telecom vendor’ that can be opened for business immediately after they report it,” Kinews detailed.
The lack of relevant laws has led each bitcoin exchange to set up their own security regulations, explained a domestic cryptocurrency exchange, Coinone. “Compared to financial institutions like banks, it is true that these are not enough,” the publication quoted the exchange saying. “For Coinone, we are building an enhanced security system that includes not only our own security management but also consulting services from security experts.”
In addition, the media outlet quoted an official of the South Korean Financial Supervisory Service saying, “legal guidelines are essential for insurance to compensate for the damage caused by virtual currency.”
Do you think South Korea will follow Japan’s footstep and legalize bitcoin? Let us know in the comments section below.
Images courtesy of Shutterstock and Business Korea
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