South Korea Considers BitLicense-Type System to Regulate Cryptocurrency Exchanges
South Korea’s government is considering a licensing system to regulate cryptocurrency exchanges in the country similar to New York’s ‘BitLicense’.
In a report from BusinessKorea, an official from the government ministry involved in a digital currency task force, said:
“We are positively considering the adoption of an exchange approval system as the additional regulation on cryptocurrencies. We are most likely [going to] benchmark the model of the State of New York that gives a selective permission.”
This news marks a significant change in the initial direction many believed South Korea was heading. Similar to China, investors and traders within the crypto market have been speculating whether the South Korean government would follow suit with an outright ban on cryptocurrency trading. In January, it was reported that digital currency investors in South Korea were ordered to change their anonymous cryptocurrency accounts to ones linked to their identities or face penalties from the end of January.
It’s reported by BusinessKorea that the government’s hardline approach has changed due to speculation on the market subsiding. As a result, the government doesn’t believe that it needs to regulate the cryptocurrency market for the time being. Not only that, but a ban on the market could have an impact on the development of the blockchain technology.
Kim Do-yeon, Deputy Prime Minister and Minister of Strategy and Finance, is reported as saying:
“We don’t need to get rid of or suppress digital currencies.”
The news source added that the Ministry of Strategy and Finance is ‘aggressively’ working at adopting the exchange licensing system, but a final decision is not expected until after local elections in June.
Dubbed the ‘BitLicense,’ the New York State Department of Financial Services’ (NYDFS) regulatory framework was launched in June 2015. Only after an exchange has received the license in New York can it legally trade digital currencies within the state. Not only that, but the exchanges are required to adhere to strict money transmitter regulations.
However, while it adds some legitimacy to the sector, the high cost of acquiring the BitLicense has meant that many exchanges have left the state of New York to set up elsewhere. There are, however, a limited number of cryptocurrency exchanges that operate in New York such as digital currency Coinbase.
Notably, though, the South Korean government feel that the introduction of its own BitLicense will enable them to bring digital currencies into the institutional system in addition to supervising the market.