- Financial Regulator in South Korea Close to Classifying Unauthorized Cryptocurrency Exchanges as…
Financial Regulator in South Korea Close to Classifying Unauthorized Cryptocurrency Exchanges as Illegal Fundraising under New Regulations
“Cryptocurrency exchanges can however apply for authorization to operate, on condition they implement standards and measures for customer protection and enhanced transparency.”
As reported by South Korean daily newspaper Hankyoreh, South Korea’s Financial Services Commission (FSC) is close to completing proposed regulations for cryptocurrency exchanges in the country — a move that will treat all unauthorized cryptocurrency exchanges as illegal fundraising. This move aims to crackdown on the use of cryptocurrencies for money laundering purposes.
Currently, all cryptocurrency exchanges are regarded as Electronic Commerce Transactions under the Act on Consumer Protection, meaning they are deemed an e-commerce website by anyone who registers as an online vendor. Examples of cryptocurrency exchanges in the country include Bithumb, Korbit and Coinone, amongst others.
The South Korean government sees cryptocurrencies as not a financial instrument, but rather a form of unauthorized fundraising. The FSC has previously remarked in September that it will ban all ICOs in the country. It has also actively recommended against the trading of cryptocurrencies. This reported new move to ban all cryptocurrencies exchanges in the country represents its biggest regulatory move yet.
End of cryptocurrencies in South Korea?
With regards to regulations, the answer is no. Despite seeing all cryptocurrency exchanges as illegal by default, exchanges can still apply for authorization to operate. However, to be authorized they will need to proof that they implement standards for consumer protection and be transparent at every stage of a transaction.
A statement from an official at FSC reads as follows:
“Cryptocurrency exchanges will be required to maintain standards for consumer protection, such as having separate deposits for customers’ assets, and for increasing transparency, such as having a procedure for confirming customers’ identity. The authorities will also be empowered to prosecute exchanges that break these rules.”
Another reason why this new move is far from the end of cryptocurrencies in South Korea is because the country is seeing huge interest in virtual currencies despite the conservative stance from its government. South Korea is reportedly the third largest bitcoin exchange market — after Japan and the U.S. — owning approximately eight percent of the global market share.
As reported by Forbes, South Korea is also “home to three of the world’s top five exchange houses for Ethereum, pushing 35–40% of the coin’s global trade.”
Steven Lim, Chief Strategy Officer (CSO) of cryptocurrency exchange Coinone has commented previously on the cryptocurrency fever in the country.
“People are crazed over it. Grandpas and grandmas come to our office lobby and say they want to put half a billion won ($447,000),” he said.
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- Date of publication:
- Mon, 12/04/2017 - 19:32
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