South Korea’s government is hurrying the finalization of the first crypto and blockchain legislation of the country, to recognize the cryptocurrency, as well as blockchain sector as legal industries.
What does this mean for crypto?
According to one report from CCN, the local financial authorities initially disclosed their intent to regulate the cryptocurrency market with stricter, but more comprehensive regulatory frameworks, to protect the investors, as well as facilitate the growth of startups in the blockchain industry.
Earlier this year, the personnel of the government admitted that the financial authorities were reluctant towards regulating the cryptocurrency market as they feared local investors would consider decision as the adoption, as well as the embracement of cryptocurrencies by the government.
But, in June this year, some subsequent to two security breaches experienced by Bithumb and Conrail, formerly the second, as well as the fourth largest cryptocurrency exchanges in South Korea, the government acknowledged the necessity of strict regulatory frameworks to oversee the local cryptocurrency market.
Previously, cryptocurrency exchanges were governed as communication vendors, outside of the scope of the Financial Services Commission or FSC, which is the leading financial watchdog of South Korea. Some of the companies were permitted to run trading platforms with a simple communication vendor license, which costs less than $40 with no base capital and requirements.
Upon the finalization, as well as the passing of the new cryptocurrency and blockchain bill, digital asset exchanges are going to be considered as regulated financial institutions and are also going to be under the control of the FSC. Strict security measure, internal management system, as well as Know Your Customer (KYC), Anti-Money Laundering (AML), and transaction monitoring requirements are going to be demanded by the government, in order to ensure crypto exchanges provide the same level of service as commercial banks, as well as significant financial service providers.
Is the bill going to play a vital role?
One spokesperson from KFIU said that under current regulations, there are some definite limitations in preventing money laundering on crypto exchanges as the only way that authorities can spot suspicious transactions is through banks. If the bill of lawmaker Jae Yoon-kyung from the Democratic Party of Korea passes, local authorities are going to have the ability to impose same regulations on crypto exchanges which are implemented on commercial banks.
The newly created cryptocurrency and blockchain bill, if passed before the end of this year, is expected to play a vital part in facilitating more capital to flow into the local crypto market in the times that come, crucially throughout 2019.
Most of the analysts predict the price of significant digital assets, to surge drastically by the end of this year and sustain strong momentum over the following 12 months. If the next rally of cryptocurrencies can actually be supported by favorable legislation inducted by the third largest crypto market in the world after the US and Japan, the movement of the market is significantly going to be intensified.
How far away it actually is?
Already, some cities such as Busan, which is the largest city in South Korea after Seoul with a community of 3.5 million, have revealed their plans about creating vibrant environments for cryptocurrency startups and blockchain development teams, assuming that the bill is going to be passed in the next several months, possibly in the fourth quarter of 2018.