Increase consumer trust in cryptocurrencies by introducing legislation to legalize Blockchain assets
South Korean lawmakers will be presenting several bills that will affect the legal status of cryptocurrencies. According to the Korea Herald, Rep. Park Yong-jin of the Democratic Party stated on July 3, 2017, that he will introduce three revisions in July that will build a set of regulatory frameworks for digital currencies. According to Park, the legislation is intended to fill “the void of a state-led protection that guarantees digital currency’s value,” and eradicate “the possibility of wreaking havoc on national economy from digital currency bubble burst.”
One bill aims to revise the Electronic Financial Transactions Act. If approved, the bill will require traders, brokers, and other businesses involved in cryptocurrency transactions to get regulatory approval from the Financial Services Commission, maintain data processing facilities, and have at least 500 million won ($436,300) in capital.
Tax laws will also be revised to allow Korean financial authorities to pursue tax evaders who do not pay income or corporate tax from digital currency transactions. According to Park and the Financial Supervisory Service, although virtual currency exchanges hold a large amount of market power in the country’s cryptocurrency space, there is no legal ground for their business.
The move for more robust regulation comes after a mishap with South Korean exchange Yapizon, when it fell victim to a massive bitcoin heist in April. In the incident, a hacker swiped four hot wallets and made off with 3831 bitcoin, which at the time totaled to about $5 million. To resolve the problem, Yapizon implemented a clever accounting scheme in which it essentially provided users with “IOUs.” At the time of the occurrence, the South Korean government authorities lacked regulation to handle such calamities. Park’s proposals look to fill this void and increase trust in one of South Korea’s emerging markets.
Cryptocurrency investments have also been on the rise in East Asian markets. To promote growth and innovation in FinTech companies operating in foreign exchange markets, the South Korean Ministry of Strategy and Finance in May decided to revamp capital requirements, which will go into effect July 18.