A Big Relief? Korea to Relax Stringent Cryptocurrency Regulations
On May 6, 2018, the new pro-reform Governor of South Korea’s Financial Supervisory Service (FSS), Yoon Suk-heun has said that agency is considering relaxing some of the more stringent crypto regulations in the country.
Adequate Regulations: A Panacea to the Crypto Market
Suk-heun made this known in the aftermath of his confirmation as the new FSS Governor. Speaking to reporters, he said:
“Regarding cryptocurrencies, there are some positive aspects.”
The Financial Services Commission (FSC) nominated Yoon for the position, and the FSS is under the supervision of the FSC. The latter is responsible for inspecting policies while the FSS is in charge of examining and directly supervising the country’s financial market.
Suk-heun stated his belief that well-defined regulations are needed in the cryptocurrency market. During his address to reporters, he said that better laws would produce a stable crypto market. He went further to say that under an adequate crypto regulatory framework, the market is bound to grow and mature. As a result, more products and services will be created, leading to a more practical crypto environment that benefits all stakeholders.
The new FSS Governor declined to give any specifics of the approach that the FSS will take. Suk-heun, however, stated that many issues were plaguing the market that needed to be carefully reviewed. He expressed optimism that a thorough approach would be successful in coming to terms with the nuances of the country’s crypto market.
Suk-heun is known in the financial and political circles as a reformist and an activist. The consensus in South Korea is that the slightest changes in the tone of present regulatory paradigm will have a positive effect on the crypto market. Suk-heun will resume his new post on May 8, 2018, and is scheduled to hold a press conference to discuss some of the agency’s plans.
Reinforcing the Ban on Anonymous Crypto Trading
A critical issue at the heart of cryptocurrency regulations in South Korea is the ban on anonymous trading. During the furor that accompanied the decision by the government to ban crypto trading in late 2017, the threat of anonymous trading being used to facilitate money laundering and other illicit activities was a common trope.
Even after the decision was reversed, the government still insisted on the anonymous trading ban. As a result, real-name identification procedures have become compulsory for all crypto exchange platforms in the country.
The FSC mandated that all retail crypto investors convert their virtual bank accounts to their real-name bank accounts. Failure to comply meant termination of their trading accounts. The new rule also stipulated that deposit and withdrawals were only possible for account holders using their real names in both their crypto trading and regular bank accounts. The regulatory bodies also have free reign in examining the transaction records of crypto traders in the country. These measures have so far prevented under-aged and foreigners from the crypto trading market in South Korea.
In a related development, a group of South Korean lawmakers announced that they were working on a bill that will legalize ICOs in the country. The government had banned ICOs in 2017, but this new piece of legislation will allow ICOs, pending the fulfillment of certain conditions, to be allowed in South Korea. The bill aims to ensure continuous development in the blockchain arena while still protecting investors from pump and dump schemes.