South Korea eyes adopting New York’s crypto regulation
SOUTH KOREA has unveiled its plans to regulate cryptocurrency trading by adopting a system which resembled New York’s controversial “BitLicense” policy.
A government official close to the task force on virtual currency said on Sunday that “Bitlicense”, introduced in the US in 2015, could either be enacted or at the very least, debated, Business Korea reported.
“We are positively considering the adoption of an exchange approval system such as the additional regulation on cryptocurrencies. We will most likely benchmark the model of the State of New York that gives a selective permission,” the official, who declined to be named, said.
In New York, a “BitLicense”, allowing digital currency traders to do business, is issued by the New York State Department of Financial Services (NYSDFS).
With a very high entrance level, the industry is heavily in New York regulated as traders must comply with 15 detailed regulations such as a certain amount of capital and quarterly financial reports. The regulations in New York also limit the types of crytocurrencies that are allowed to be traded.
The South Korean government says that with the New York model, cryptocurrencies would be brought into the institutional system, allowing it to be supervised on an orderly way.
Meanwhile on Wednesday, South Korea said it will take firm action against illegal and unfair acts in cryptocurrency trading after a 280,000 signature petition was sent to the presidential Blue House.
“The government’s basic rule is to prevent any illegal acts or uncertainties regarding cryptocurrency trade, while eagerly nurturing blockchain technology,” Hong Nam-ki, minister of the office for government policy co-ordination said in a statement.
The petition was made after the justice minister said in January that the government may shut down cryptocurrency exchanges. It demanded that the government never impose unreasonable regulation on virtual currency trading.
The government has to produce an official response within a month for a petition that gathers more than 200,000 signatures.
South Korea, which has become a cryptocurrency trading hub after a market frenzy that attracted even housewives and students, has already imposed some regulations on cryptocurrency trading.
It banned the use of anonymous bank accounts for virtual coin trading as of Jan 30, but said it does not intend to go as far as shutting down domestic exchanges.
“But, the government is still divided with many opinions ranging from an outright ban on cryptocurrency trading to bringing the institutions that handle the currency into the system,” Hong said, adding that the government will thoroughly review the industry within global norms.
South Korea will also develop ways to tax virtual currencies, led by the finance ministry, and should announce measures within the first half of the year to develop the blockchain industry, Hong added.
Additional reporting by Reuters
- China exploring verification system for financial technology products
- Should Singapore waive GST on digital payment tokens?
- Why Facebook’s Libra may succeed where traditional banks failed
- Blockchain success needs humanists, artists and creative thinkers
- Why blockchain increases trust in supply chains