On July 18, Park Yong-jin, a representative in the Democratic Party of Korea, hosted a public hearing at the National Assembly to discuss cryptocurrency. During the hearing, seven panelists offered insights into the benefits and risks of cryptocurrency, focusing on consumer protection and taxes. The panel included voices from government, academia, and the public.
According to The Korea Herald, the panel promoted “state-led protection” to ensure the stability of cryptocurrency and the integrity of affiliated businesses. Whether the government will back a cryptocurrency or conduct audits of related corporations is unclear. Up until now, South Korea’s lack of official governmental guidance has created a complicated set of circumstances.
“Without a legal framework, we can neither regulate, nurture, nor support the cryptocurrency-related industries,” said Park. “Also, the legal vacuum prevents those who committed virtual currency-related crimes from being punished.”
South Korean digital currency exchanges have been targeted by cyberattacks before, so codifying specific safeguards could help protect companies and consumers. Establishing a legal basis for cryptocurrency is the first step. Before the panel, Jung Sun-seop, professor of law at Seoul National University, proposed that legal revisions should recognize virtual currency as a means of payment.
However, Kim Yeon-june of the Financial Services Commission explained that the government has not yet determined whether virtual currency will be subject to financial regulation. The government has yet to select a tax strategy and even the panelists themselves could not reach a consensus on whether cryptocurrency should be considered as an asset or currency.
A researcher from the Korea Institute of Finance, Lee Dae-ki, suggested that trading regulation is the number one priority. “The activity of trading and brokering digital currency should be regulated prior to the cryptocurrency itself,” said Lee. “Crimes occur in the middle of those activities.”
Speaking on behalf of victims of cryptocurrency scams, Chae Won-hee, called for greater punishments for transgressors.
Despite the absence of regulation, the South Korean virtual currency markets are evolving rapidly. Just last week, a bevy of South Korean FinTech firms received approval to offer international money transfer services. These will facilitate the global exchange of currency, including bitcoin – and by extension, other virtual currencies that trade in the South Korean markets.
Although South Korea remains without a concrete action plan, the confluence of government officials, academicians, and the general public demonstrates the nation’s receptive and engaged community.