Circling the Wagons

By GG Jee and Liam Bussell

“There is a need for the government to cope with the virtual currencies to prevent them from being used as tools for crimes and simple speculative investment.”

This week we are back on Korea following some interesting developments around the FSC and the developing regulation issue. The FSC has appointed a JTF (Joint Task Force) to look at the crypto and digital assets industry. This comes from a Korean language release put out by the FSC, with thanks to GGJ

[Korean Regulation Research]

The news regarding Korean regulations came up from a press release from FSC (Financial Services Commission)

There was a “Digital Currency Related Department Joint Task Force” meeting held by the vice president of FSC.

The participating parties were as follows :

From FSC -

Vice president,

Head of Financial Services,

Head of Financial Intelligence Unit,

Head of Electronic Banking

Related Government Departments -

Office for Government policy coordination,

Ministry of strategy and finance,

Fair trade commission,

Ministry of justice,

Korea Communications Commission,

National tax service,

National police agency,

Bank of Korea,

Financial supervisory service,

Korea internet and security agency

1. Background

- The trade volume and price of digital currencies have recently rocketed. The market seems to be overheated.

- There are concerns of consumer damages due to illegal trade of digital currencies and fraudulent activities such as fund raising business without permission through digital currencies.

2. Actions Plans

- Actions aim for 1) securing transparency in trades, and 2) prepare means of consumer protection

- An executable way under current laws is to reinforce KYC and STR (Suspicious Transactions Report) duties on the banks

- Considering the trends of regulations reinforcing AML in other countries, means of regulating domestic trade will be applied in the near future (Through revisions in ACT ON REPORTING AND USE OF CERTAIN FINANCIAL TRANSACTION INFORMATION)

- Fund raising without permission through digital currencies will be strictly regulated.

- ICOs using digital currencies in forms of SECURITIES such as equity securities and debt securities will be seen as violation of FINANCIAL INVESTMENT SERVICES AND CAPITAL MARKETS ACT

- The meeting will be held quarterly.

Coinone, one of the biggest exchanges in Korea will be under investigation to see if there were any illegal activities in their margin trading business. In general, the investigation agency thinks that the company was not permitted to lend crypto assets to consumers.

Bithumb has hired an ex-government employee and closed down their margin trading service. So some suspect that Bithubm has been noticed with the government activities regarding regulations.

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