The South Korean government is pushing ahead to reach the country’s first crypto and blockchain regulation, to identify the cryptocurrency and blockchain industry as legal sectors.
As reported earlier, local financial authorities at first revealed their plans to control the cryptocurrency market with more rigid but more widespread regulatory structures to safeguard investors and enable development of startups in the blockchain industry.
Previously, government personnel recognized that the financial authorities were hesitant with regards to controlling the cryptocurrency market with concerns that investors will consider the move as the government’s acceptance of cryptocurrencies.
But in June, following two security hacks experienced by Bithumb and Coinrail, which were previously the second and fourth largest cryptocurrency exchanges in South Korea, the government came to the point of realizing the need for more rigid regulations to manage the local cryptocurrency market.
In the past, cryptocurrency exchanges were overseen as communication operators, out of the jurisdiction of the Financial Services Commission (FSC). Companies were allowed to operate trading platforms with a simple communication vendor license, which is less expensive.
After the conclusion and release of the new cryptocurrency and blockchain bill, digital asset exchanges will be regarded as regulated financial institutions and will be regulated by the FSC. Rigid security steps, internal management system, Know Your Customer (KYC), Anti-Money Laundering (AML), and transaction monitoring requirements will be required by the government, to allow crypto exchanges offer the same level of service as commercial banks and leading financial service providers.
According to a KFIU spokesperson, “Under current regulations, there are clear limitations in preventing money laundering on crypto exchanges because the only way authorities can spot suspicious transactions is through banks. If the bill of lawmaker Jae Yoon-Kyung from the Democratic Party of Korea passes, local authorities will be able to impose identical regulations on crypto exchanges that are implemented on commercial banks.”
If implemented prior to the end of this year, it is hoped that the new cryptocurrency and blockchain bill will bring in more money into the local crypto market into the coming years, especially next year.
Majority of analysts are betting that the price of leading cryptocurrencies will soar immensely by the end of 2018 and gain a strong growth rate in the coming year. If the next recovery of cryptocurrencies can be held by progressive rules instigated by the third biggest crypto market in the world, the trend of the market will be greatly improved.