Bitcoin: South Korea to Regulate Cryptocurrency Giant
- Tax Accounting and Finance
- The Knowledge Group
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After reports that South Korean regulators will clamp down on cryptocurrency, Financial Services Commission chair Choi Jong-ku acknowledged the agency’s interest in restricting the currency “to some extent” to contain side effects of speculation. In November,Bitcoin.com reported that the Commission expected “to maintain standards for consumer protection” through measures such as caps.
About a million South Koreans hold some amount of bitcoin. Their activity accounts for a fifth of all bitcoin trading worldwide. So far, cryptocurrency exchanges in South Korea and elsewhere have been mostly unregulated.
As three U.S. exchanges roll out bitcoin futures trading this month (TD Ameritrade being the third, following Cboe and its rival CME Group Inc.), the currency is being watched around the world, and so are governments’ reactions to its breathtaking — and some say ominous — rise.
Not only are governments likely to regulate its use as it becomes increasingly mainstream; governments, like many individuals at the present time, may experience their own kind of “FOMO” — fear of missing out.
No Basis for Ban
While the country’s finance leaders found no basis in law for a ban, South Korea’s Ministry of Justice is facilitating the regulation of cryptocurrencies through a new Virtual Currency Task Force. The government recently said it will tax profits for investors, much as the United States does currently. And it will bar foreigners and minors from trading in, or banking, virtual currency in the country. It will also heighten authentication standards for traders, according to the Office of Government Policy Coordination.
The government already previously announced that it will prevent ICOs. Moreover, South Korea’s banks will not be allowed to interact at all with cryptocurrency — which means transactions will occur through exchanges only.
But fear is growing that North Korea is taking plenty of advantage of the rise in cryptocurrency. North Korean hackers are reportedly seeking bitcoin to support their authoritarian government.
So, can legitimized national banks be far behind? Several central banks, including those in China and Japan as well as in Sweden, are developing their own virtual currencies.