The South Korean government is said to be revising its cryptocurrency policies after the Buenos Ares G20 Summit agreed to create a set of “unified regulations” in light of acknowledging that cryptocurrencies are “financial assets”.
In late March, the G20’s Finance Ministers and Central Bank Governors released a communique noting that crypto-assets have “the potential to improve the efficiency and inclusiveness of the financial system and the economy more broadly”. It also points out that crypto-assets are not without risks, noting “consumer and investor protection, market integrity, tax evasion, money laundering and terrorist financing” as significant issues.
Significant Moves in South Korea
Since late 2017, South Korea has been churning out controversial and conflictingly positive headlines, from bans on initial coin offerings (ICOs) to proposing a cashless society and a cryptocurrency for its capital city.
As we enter the second half of 2018, the supposedly skeptical nation has proven itself to be a valuable ally to blockchain innovations and is now moving ahead to have its policies fall in line with those proposed by the G20.
According to The Korea Times, G20 financial policymakers have set July deadline for the proposed “unified regulations” and that it doesn’t recognize cryptocurrencies as a threat to financial markets as they are “too small to jeopardize it”. Which may be due to the total market value of cryptocurrencies being less than 1 percent of global GDP.
The local news outlet also identifies that the present “non-financial product or asset” classification of cryptocurrencies in South Korea is at odds with the G20 assessment of digital currencies.
Whilst it may be a tricky issue for the countries regulators due to their current stance, it appears as though this won’t be enough to stifle efforts; The South Korean Financial Supervisory (FSS) said:
“It’s almost certain that cryptocurrencies will be classified as assets and the main issue will be centered on how to regulate them properly under the unified frame that will be agreed upon between G-20 nations. Given the current stance, this isn’t good, but we will step up efforts to improve things,”.
Building Blocks to a Crypto-Future
As mentioned before, South Korea has been piecing together some very significant parts of the blockchain/cryptocurrency regulation puzzle; in early May the new FSS Governor Yoon Suk-heun revealed his positive outlook on cryptocurrencies, stating that “There are a lot of issues that need to be addressed and reviewed. We can figure them out but gradually.”
The countries National Tax Agency has also been working with the finance ministry to collect and study taxation data collected from exchange operators; cryptocurrency trading is not legally recognized, and therefore only operators have to pay income taxes.
Furthermore, the countries central bank The Bank of Korea (BOK) has a task force studying the possibility of a central bank digital currency (CBDC). Additionally, the BOK had confirmed it was considering blockchain and cryptocurrencies as part of the “cashless society” project.
“The BOK’s recommendation regarding cryptocurrencies will be released by the end of June, at the earliest,” a BOK official said on May 14.
Bearing in mind that South Korea is the third largest fiat to crypto trading block in the world, it should come as no surprise that the country is steaming ahead with positive and evolving regulation attitudes.
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