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Bitcoin Legalization Draws Caution from Korea’s Financial Regulator

Samburaj Das
Last Updated March 4, 2021 4:57 PM

Korea’s primary financial regulator is striking a cautious tone ahead of the proposed set of bills seeking to legalize and regulate cryptocurrencies like Bitcoin and Ethereum in the country.

Yesterday, lawmaker Park Yong-jin, a lawmaker and politician of the country’s ruling Minjoo Democratic Party publicly revealed his effort to draft three legislative revisions to existing laws in order to build a regulatory framework for digital currencies.

In essence, the lawmaker is pushing for changes in laws to ultimately tax bitcoin adopters on capital gains and mandate licenses for digital currency exchanges in the country.

“Currently, domestic virtual money traders Bitthumb, Korbit, CoinOne, and Coinplug were established without any license from financial authorities. They receive about 6.5 billion won (approx. $5.8 million) a day by 0.5 of transaction fees as commission,” Park stated.

The politician contends that the lack of legal regulation for bitcoin in Korea makes all activities related to cryptocurrencies, illegal. He also cited the need for “state-led protection” of digital currency investors, speculating “the possibility of wrecking havoc” on the country’s economy in the event of a digital currency bubble. South Korea is notably among the world’s largest trading markets.

Not on Board for Legalization

Park’s efforts in pressing for regulation and legalization, however, has not found support by Korea’s financial regulator.

In a report today, Business Korea cites an official from the Korean Financial Supervisory Commission as stating:

This bill will not be legislated at the request of the government. I heard that a bill related to virtual money will come out, but I do not know specifics yet.

The Korean FSC has seemingly been caught unaware of the set of bills being drawn up by Park until the latter’s public announcement yesterday. The official added that the FSC will be reaching out to the lawmaker’s office to look into the details of the bill.

As CCN.com reported in November 2016, the FSC convened a meeting to launch a digital currency task force comprising of the country’s central bank and multiple ministries to oversee the regulatory and licensing parameters for bitcoin exchanges.

“The government will push for the systemization of digital currency on a full scale,” stated FSC chairman Yim Jong-yong at the time, pointing to templates of the United States and Japan.

In contrast, the unnamed FSC official statedtoday:

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.

As bitcoin gains acknowledgment as a legal method of payment in neighboring Japan, the cryptocurrency is now being followed keenly in Korea’s mainstream. The coming weeks and months are likely determine a course for the legalization of bitcoin in the country.

Featured image from Shutterstock.