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Pro-Crypto Bill Proposed by South Korean Lawmaker

Pro-Crypto Bill Proposed by South Korean Lawmaker

A South Korean bill promoting cryptocurrency trading has been introduced in a bid to establish a robust digital asset ecosystem.

Crypto-bill

According to local media sources cited by BusinessTelegraph, South Korean lawmaker and National Assembly Political Committee member, Kim Sun-dong, announced the initiation of what he called the ‘Digital Asset Trading Promotion Act’. Elaborating on the intentions of the bill, Kim said in a press statement:

“‘The Digital Asset Trading Promotion Act’, includes a comprehensive plan for establishing a guideline for promoting the development of virtual currency exchanges and blockchain technology, tax reduction and exemption, measures against hacking damage, and prevention of market disturbances.”

Kim echoed the concerns that many have with regard to domestic crypto businesses leaving South Korea due to unaccommodating laws and regulations for digital assets. More specifically, Kim referred to the recent sale of cryptocurrency exchange giant Bithumb to a Singapore-based consortium. He acknowledged that domestic cryptocurrency transactions made up a significant percentage of domestic stock market trades at the beginning of this year, highlighting the negative economic impacts such moves can have.

Referring to the stifling impacts of over-regulation, Kim said:

“The government is focusing only on the risk of virtual currency and concentrating only on the crackdown of illegal activities… In order to lead the global trend of blockchain technology development, it is necessary to prepare laws and regulations as soon as possible.”

Crypto-exchanges

Due to the significant hacks that South Korean exchanges suffered earlier this year, regulators have sought to remedy the situation by increasing security and compliance measures. Though the move seemed positive at the time, it has eventually lead to exchanges being denied tax perks and financial incentives that are typically offered to venture capital firms as well as domestic small and medium-sized enterprises (SMEs). This has proven extremely unpopular among South Korea’s blockchain lobbyist groups and entrepreneurs.

Notably, the bill outlines that exchanges will be required to assume liability for customers crypto losses in the event of a hack.

As per the bill, “virtual content with an apparent value such as online money, points, game items and virtual currencies as digital assets”. It goes on to define exchange operators as digital asset trading companies, adding:

“Those who want to operate a digital asset trading business should have more than KRW 3 billion won [USD 2.66 million] in capital, enough manpower, computerized systems, and physical equipment to be approved by the Financial Services Commission [FSC].”

Blockchain nation

South Korea has been pressing tirelessly to establish laws and regulations that not only provide domestic startups with the grounding they need to thrive, but also establish whether or not initial coin offerings (ICOs) will be a part of the domestic blockchain ecosystem.

That said, South Korea is extraordinarily in favor of adopting blockchain technologies into public sector projects, voting systems, and energy grids. Should cryptocurrencies and ICOs fail to find the legitimacy they seek, the domestic blockchain industry should thrive as a whole, tokenized or not.

 

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First Sharia-Compliant Islamic Crypto Exchange Launches in UAE

UAE-based startup Adab Solutions has launched the world’s first cryptocurrency exchange that operates with full Sharia law compliance.

The exchange will be overseen by an in-house Sharia Advisory Board (SAB) comprised of independent experts that will ensure the operations unfailingly remain within the jurisdiction of Islamic law. The project cites its purpose as bringing a quality assets exchange to the Islamic community for the first time.

Adab Solutions plans to begin an initial coin offering (ICO) in September, with the tokens distributed functioning in the platform’s internal ecosystem as the tool for accessing services. All of the exchange’s commissions will also be issued using the tokens.

Crypto may be more compatible than fiat

Sharia law prohibits Muslims from lending money to anybody with the expectation of receiving interest on this amount, regarding fractional reserve lending that the majority of fiat currencies operate with as usury.

Cryptocurrencies differ in this respect as they are underpinned by logistics of scarcity, appreciated by those practicing Sharia as it acts similarly to commodity trading such as gold that they adhere to.

In April, Islamic scholar Mufti Muhammad Abu Bakar published a paper detailing how the majority of the time Bitcoin is Halal (permissible), with the caveat that illicit use of the cryptocurrency or use of it in countries where it is prohibited by local laws are not Sharia-compliant.

Several of the shared principles between Bitcoin, blockchain, and Sharia cited in the paper include a goal of reducing excessive uncertainty, as well as their primary application of payments and exchanges.

Speculation following the published report attributed a USD 1,000 price surge of Bitcoin to Bakar’s statement that Muslims can participate in Bitcoin trading.

Comprising around 23% of the world’s population, Muslims can indeed be a powerful market force as they choose to enter the community.

 

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Bitcoin Permissible Under Islamic Sharia Law, Claims Scholar

Mufti Muhammad Abu Bakar, a sharia advisor and compliance officer at Blossom Finance in Jakarta, Indonesia, has published a paper that indicates that the purchasing of Bitcoin by Muslims can be permitted (Halal) in certain situations.

These comments by come at the end of a week that saw the annual Sharia conference of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) take place in Bahrain. At this conference, leading Islamic finance scholars have been discussing whether there is a place for cryptocurrencies under Sharia Law and whether Islamic financial firms can invest in the cryptocurrencies alongside the rest of the world.

Discussed at the conference is whether new currencies such as Bitcoin fell into the ribawi category, as do gold and silver.  According to Islamic law, items falling under the ribawi category must be exchanged in equal measure and with immediate transfer of possession, otherwise, transactions may involve riba or usury, a major prohibition in Islam.

This argument is key to any decision that might be taken in the future regarding the permissibility of virtual currencies in the Muslim world, as the buying and selling of Bitcoin could be viewed as a type of usury due to its huge profit and loss margins.

The declaration by Mufti Muhammad Abu Bakar that Bitcoin could be compliant with Sharia law has been suggested by some commentators as one possible reason for the hike in the price of Bitcoin over the past 24 hours, as it opens up the market to Muslim investors unsure about their position regarding trading in the digital currency.

An excerpt from Abu Bakar’s paper read:

In Germany, Bitcoin is recognized as a legal currency and therefore qualifies as Islamic money in Germany. In countries such as the US, Bitcoin lacks official legal monetary status but is accepted for payment at a variety of merchants, and therefore qualifies as Islamic customary money.”

As the fastest growing religion in the world, with Muslims now representing 23% of the world’s population, Bitcoin has become an important issue for financial authorities. Last year, the International Monetary Fund (IMF) held its first formal discussion about Islamic banking needs.

 

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