A set of bills to give cryptocurrencies, including bitcoin and ethereum, legal grounds is being prepared by a South Korean lawmaker, a long-awaited move to protect South Koreans from potential risks in transactions.
Rep. Park Yong-jin of the ruling Democratic Party of Korea said in a release Monday he would introduce three revisions in July to build a set of regulatory frameworks for digital currencies.
Under the bill that aims to revise the Electronic Financial Transactions Act, traders, brokers, or other business entities involved in cryptocurrency transactions would be required to get regulatory approval from the Financial Services Commission. The requirements include the retention of capital of at least 500 million won ($436,300) and data processing facilities.
Also, revisions to the laws on income tax and corporate tax would allow financial authorities to tackle tax evasion from the digital currency transactions.
In the proposal, Park cited the need to address “the void of a state-led protection that guarantees digital currency’s value,” “digital currency’s nonexchangablilty to other existing currencies” and “the possibility of wreaking havoc on national economy from digital currency bubble burst.”
For the past two years, bitcoin worth 1.92 trillion won was traded, according to data from digital currency market tracker Coinass. The data also showed the number of transactions of bitcoin in 2016 rose by 17.1 percent from 2015.
Coinass, which is privately owned and the only market tracker, has tracked bitcoin transactions and closing prices since 2015, and ethereum transactions since October 2016. But local cryptocurrency transactions are not still fully tracked, Park noted, adding the government control is in need.
Moreover, virtual currency trading platforms in Korea, including Bithumb, Korbit and Coinone, taking up 75.7 percent, 17.6 percent and 6.7 percent in the market respectively, have no legal grounds for their establishment, according to Park and the Financial Supervisory Service.
Experts hailed the move, which came in line with Tokyo’s fresh set of bitcoin regulation introduced in May. Putting digital currency under state control is translated into “removed uncertainties” and “boosted transparency,” said Kim Kyung-hwan, head attorney of law firm Minwho.
“User protection, tax evasion and money laundering have long been issues in terms of digital currency transaction,” Kim told The Korea Herald. “Digital currency traders have often found themselves in trouble, because they are out of a legal boundary.”
South Korea’s local currency had the fourth-largest bitcoin exchange trading volume from April 1 to June 10, according to data from Cryptocompare. More investors tend to flock to virtual currencies due to skyrocketing trade prices, while some, including lawmaker Park, compare the cryptocurrencies with tulip, whose price bubble burst rattled the European nations.
By Son Ji-hyoung (firstname.lastname@example.org)