In recent months, South Korea’s digital currency trading activity has been among the most robust in the world. Many policy experts have been uncomfortable with the lack of industry regulation, however, with some worrying that any sudden downturn in the cryptocurrency markets could negatively impact the country’s broader economy. This week, Democratic Party of Korea Representative Park Yong-jin announced that he intends to introduce a new bill to enact a framework for regulating digital currencies like Bitcoin.
According to a report in the Korea Herald, Park has cited several reasons for his proposed measure: the absence of any centralized protection of cryptocurrency price, the difficulty users can confront when converting digital currencies to fiat currencies, and the hazard these cryptocurrencies could pose to the South Korean economy.
Park’s bill is designed to add new language to the country’s Electronic Financial Transactions Act. The revisions would mandate that brokers, traders, and others seek approval from the nation’s Financial Services Commission before engaging in digital currency transactions. Companies would also be required to maintain data facilities and a minimum of 500 million won in capital reserves – roughly $436,000 USD. Changes to the tax laws would also provide authorization for officials to deal with tax issues related to any cryptocurrency transactions.
While those moves may not be popular among the broader digital currency community in South Korea, it’s likely that many officials and legal analysts will applaud the measure. The Herald quoted Minwho head attorney Kim Kyung-hwan, who observed that,
“User protection, tax evasion and money laundering have long been issues in terms of digital currency transaction. Digital currency traders have often found themselves in trouble, because they are out of a legal boundary.”