South Korean regulators are reportedly strengthening the regulation and monitoring of digital currencies including bitcoin.
South Korea’s digital currency task force – a group comprising of the country’s central bank, financial regulators and digital currency companies – have discussed increased regulatory oversight into trading and business practices as a means to further consumer protection efforts.
According to Business Korea, the task force held a joint meeting on Sunday where authorities planned to introduce these increased regulations for trading among the country’s domestic exchanges. The meeting, which was attended by the National Tax Service (NTS) and the Korea Fair Trade Commission (KFTC) also saw plans drawn toward strengthening user authentication procedures at exchanges as well as ‘suspicious transaction reporting’ systems at banks for transactions related to digital currencies.
Financial Services Commission (FSC) chairman Kim Yong-beom, who chaired the task force meeting, reportedly stated:
At this point, digital currencies cannot be considered money and currency, nor financial products.
Furthermore, bitcoin remittance foreign currency FinTech firms will also have to put up with increased monitoring from authorities. This, despite the South Korean government lessening the burden for bitcoin-based FinTech firms to operate in the country by issuing permits to act as foreign currency transfer services.
South Korean authorities will also reportedly recommend digital currency exchanges to include consumer protection measures when providing services.
Notably, the report also suggests that authorities will “punish” initial coin offering (ICO) fundraising platforms for violating the capital market act by raising funds through stock issuance using digital currencies.
An FSC official added:
We will clearly state the foundations of the Act on the Regulation of Conducting Fund-Raising Business Without Permission for illegal fund-raising impersonating digital currency investment and strengthen levels of punishment.
The need to examine lax cybersecurity practices that has already led to a significant customer data breach and theft of funds in a major South Korean bitcoin exchange was also discussed, with ‘severe disciplinary action’ for any violations by exchanges.
A KFTC official further added that the task force will look into other concerns like the “character of digital currency traders, taxation and permits’ by studying regulatory practices in other countries before forming new policies.
As reported in July, a set of bills leading to a regulatory framework for digital currencies could soon see the likes of Bitcoin and Ethereum legalized and regulated in South Korea.
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