A law firm in Seoul, South Korea has filed an appeal against the government’s new cryptocurrency trading rules. Anguk Law filed the suit which claims regulating trading through administrative guidance has no legal basis and infringes on property rights, according to The Korea Times
The suit was filed through the Constitutional Court’s online appeal system. The law firm claims it will prepare additional appeals filed by investors and virtual currency exchanges.
Property Rights At Stake
The firm contended cryptocurrencies are property, not legal tender, and as such, it can be exchanged through legitimate currencies or other assets with economic value. The law firm claims the government’s regulations released on Dec. 13 and Dec. 28 constitute “unconstitutional” authority.
The government issued the regulations in response to the country’s rapidly growing cryptocurrency trading over the last few months. The government has advised banks to stop permitting exchanges to offer virtual accounts to traders. The government said it will have the exchanges transfer funds through investors’ “real name accounts” that can verify the account holder’s identity to prevent money laundering and other illegal activities.
Most virtual currency exchanges in South Korea use virtual accounts that link to bank accounts. Virtual accounts allow exchanges to manage their clients’ funds more easily.
Banks Halt Virtual Accounts
Following the announcement, banks have stopped permitting exchanges to open new virtual accounts. It is therefore not possible for exchanges to serve new investors. The government’s approved trading based on the use of real names is expected to start by Jan. 20.
The government does not recognize virtual currency as a legitimate financial product. Because there is no law governing the virtual currency tokens, the tokens are akin to commodities that can be freely traded, the law firm stated.
The law firm released a statement saying the government is devaluing virtual currencies by making them difficult to trade, which amounts to an infringement on property rights. Jeong Hee-chan, a lawyer at the firm, said regulations are needed, but they should be based on laws. The lawsuit asks the government to recognize property rights and adopt regulations based on a social consensus.
Hee-chan said it is “very worrisome” the government links investor success to morally reprehensible speculation without sufficiently reviewing the matter.
Featured image from Shutterstock.