The planned introduction of regulations for the bitcoin industry in South Korea this year is currently in limbo, as government authorities and regulators struggle to take a unified approach.
For context, the growing popularity of bitcoin and digital currencies in the country spurred financial authorities to launch a digital currency task force in November 2016. Centered around figuring out regulatory and licensing parameters for bitcoin exchanges in the country, the task force was convened by the Financial Services Commission (FSC), the country’s financial regulator and watchdog.
Currently, financial authorities do not have any authority to supervise the digital currency industry in South Korea. The taskforce was touted as following a FinTech-forward agenda, one that would encourage the institutionalization of digital currencies while serving as a watchdog to keep a check on operators of fraudulent schemes.
Participants in the task force include the Bank of Korea, the country’s central bank, the Ministry of Strategy and Finance, the Financial Supervisory Service and various legal and academic experts. The Ministry of Science, ICT and Future planning was specifically tasked to oversee the registration of bitcoin exchanges in the absence of any regulatory guidelines. The task force has since referred to existing legal frameworks adopted by other countries including the United States and Japan.
However, despite multiple meetings in the following months, the task force yet to make progress. According to Business Korea, participants in the task force have supposedly ‘failed to agree on whether the virtual currency should be included in systems right now and how the systems will work if included.’
More specifically, the report also cites an FSC official as stating:
Currently, every country has different points of view on virtual currencies and there is no consensus across governments on directions. There is also a lack of systems that can be referred. So, we should approach the market cautiously.
This, despite the original roadmap of announcing the outcome of regulatory discussions this month, ahead of introducing regulations this year. Korea has firmly cemented itself among the world’s largest trading markets for bitcoin this year. Trading activity over the past 24 hours shows the total value of bitcoin traded locally scaling above Japan (due to a 10% price premium), third only after US and Chinese markets by value.
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